Bio-Rad Reports Third-Quarter 2017 Financial Results

Date: 
11/02/2017

HERCULES, Calif. — November 2, 2017 — Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global provider of life science research and clinical diagnostic products, announced financial results today for the third quarter ended September 30, 2017.

Third-quarter 2017 net sales were $535.0 million, an increase of 5.2 percent compared to $508.7 million reported for the third quarter of 2016. On a currency-neutral basis, quarterly net sales increased 3.4 percent compared to the same period last year.

The Life Science segment net sales in the third quarter of 2017 were $193.6 million, an increase of 8.7 percent compared to the same period last year. On a currency-neutral basis, Life Science segment sales increased 7.6 percent compared to the third quarter of 2016. Currency-neutral sales growth was primarily driven by sales of Droplet Digital PCR, food safety, and gene expression product lines, as well as sales from the recent acquisition of RainDance Technologies. This growth was somewhat offset by a decline in process chromatography media sales. The currency-neutral sales increase was reflected in all three major regions: Americas, Europe, and Asia Pacific.

Net sales for the Clinical Diagnostics segment in the third quarter of 2017 were $338.0 million, an increase of 3.3 percent compared to the third quarter of 2016. On a currency-neutral basis, sales increased 1.2 percent compared to the same period last year. The currency-neutral sales increase was primarily driven by increases in blood typing, immunology, and quality control product lines. Currency-neutral sales for the quarter reflected increases in Europe and Asia Pacific, partially offset by slowness in North America.

Net income for the third quarter of 2017 was $27.4 million, or $0.91 per share on a fully diluted basis, compared to $18.4 million, or $0.62 per share, during the third quarter of 2016. In addition to higher sales, net income for the third quarter of 2017 versus the same period last year was favorably impacted by a higher gross margin that increased to 56.9 percent versus 54.9 percent during the third quarter of 2016.

Net income for the third quarter of 2017 also benefitted from lower SG&A expense, which included a decrease in contingent consideration, professional services, and legal settlement expense. Net income was also somewhat offset by $8.4 million of additional expense associated with the closure of the GnuBIO research program.    

“We are encouraged overall by our performance in the third quarter, which reflects growth of many of our key product lines and markets as well as an improved operating result for the quarter,” said Norman Schwartz, Bio‑Rad President and Chief Executive Officer. “We are also pleased to report that during the third quarter we recovered a sizable amount of sales that were disrupted by our major ERP deployment in Western Europe during the second quarter, and we are now operating at a more normalized level,” he added.

The following table compares certain non-cash or non-recurring items from Q3 2017 to Q3 2016:

(in millions) Q3 2017 Q3 2016
Purchase accounting amortization
   COGS
   SG&A

$ 4.9
$ 2.4

$7.2
$1.7
Acquisition-related expense
   R&D

$3.0

-
Contingent Consideration
   SG&A

<$3.0>

<$0.3>
Restructuring
   SG&A
   R&D

$0.8
7.6

-
-
Legal Matters
   SG&A

-

$5.0
Total impact to operations $15.7 $13.6

The effective income tax rate for the third quarter of 2017 was 29 percent, compared to 19 percent for the same quarter in 2016. The effective tax rate for the third quarter of 2017 included tax benefits related to share-based compensation. The lower tax rate during the third quarter of 2016 was primarily due to tax benefits related to additional foreign tax credits from foreign cash repatriations.

Year-to-date net sales increased 2.9 percent to $1.54 billion compared to $1.50 billion for the same period in 2016. Adjusting for the impact of currency, year-to-date net sales grew 2.7 percent.

Year-to-date net income for 2017 was $44.8 million, or $1.49 per share on a fully diluted basis, compared to $48.7 million, or $1.65 per share, reported during the same period in 2016.

Financial Outlook
For the fourth quarter 2017, the Company anticipates net sales to be between $615 to $625 million, which includes sales from the recently acquired RainDance Technologies, and assumes using current foreign exchange rates. Consolidated gross margin for the fourth quarter is anticipated to be between 54.5 and 55.0 percent, which is in line with the year-to-date results. Based on this outlook, the operating margin for the fourth quarter 2017 is anticipated to be between 9.5 to 10.5 percent of sales.

“Our strong performance in the third quarter has paved the way for continued momentum for the fourth quarter, a nice way to exit the year,” Mr. Schwartz said. “Investments in our operations that notably impacted profitability over the past few years are beginning to contribute to our improved outlook in the near term and sets us on a path for growth and margin expansion in 2018 and beyond.”

Management will discuss these results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) November 2, 2017. Interested parties may access the call at 855-779-9068 within the U.S. or 631-485-4862 outside the U.S., Conference ID: 96703879. You may also listen to the conference call live via a webcast that is available on 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) develops, manufactures, and markets a broad range of innovative products and solutions for the life science research and clinical diagnostic markets. The company is renowned for its commitment to quality and customer service among university and research institutions, hospitals, public health and commercial laboratories, as well as the biotechnology, pharmaceutical, and food safety industries. Founded in 1952, Bio-Rad is based in Hercules, California, and serves more than 100,000 research and healthcare industry customers through its global network of operations. The Company employs more than 8,350 people worldwide and had net sales exceeding $2 billion in 2016. 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, the growth of our business, continued momentum for our performance in the fourth quarter, expectations regarding investments in our operations and for an improved outlook in the near term, realizing growth and margin expansion in 2018 and beyond, and our expectations regarding recently acquired businesses and regarding our products and our release of new products. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, “anticipate,” “believe,” “expect,” “assume,” “continue,” “may,” “will,” “intend,” “estimate,” 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 our ability to develop and market new or improved products, difficulties in implementing our global enterprise resource planning system, our ability to integrate acquired companies, products or technologies into our company successfully, our ability to compete effectively, foreign currency exchange fluctuations, recent and planned changes to our global organizational structure and executive management team, product quality and liability issues, international legal and regulatory risks, reductions in government funding or capital spending of our customers, supply chain issues, changes in the healthcare industry, global economic conditions, 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, 2016, and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017 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.

Investor & Financial Contacts:

Bio-Rad Laboratories, Inc.
Christine Tsingos
Executive Vice President and Chief Financial Officer
510-724-7000
investor_relations@bio-rad.com

Ron Hutton
Vice President and Treasurer
510-724-7000
investor_relations@bio-rad.com

 


 

Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Income

(in thousands, except per share data)
(UNAUDITED)
 
    Three Months Ended
September 30,
Nine Months Ended
September 30,
    2017   2016   2017   2016
Net sales $ 535,003   $ 508,745   $ 1,539,720    $ 1,496,719
  Cost of goods sold 230,483   229,276   691,914   672,989
Gross profit 304,520   279,469   847,806   823,730
                 
  Selling, general and administrative expense 196,769   201,452   604,736   596,704
  Research and development expense 61,372   49,924   173,483   148,321
  lmpairment loss on long-lived asset       2,360
Income from operations 46,379   28,093   69,587   76,345
                 
  Interest expense 5,597   5,634   16,408   16,846
  Foreign currency exchange losses, net 3,363   1,210   7,668   3,576
  Other (income) expense, net (1,436)   (1,439)   (14,611)   (13,824)
Income before income taxes  38,855   22,688   60,122   69,747
                 
  Provision for income taxes (11,462)   (4,283)   (15,281)   (21,052)
Net income $ 27,393    $ 18,405   $ 44,841   $ 48,695
                 
Basic earnings per share:              
  Net income per basic share $ 0.92   $ 0.63   $ 1.51   $ 1.66
                 
  Weighted average common shares - basic 29,660   29,444   29,618   29,402
                 
Diluted earnings per share:              
  Net income per diluted share $  0.91   $ 0.62   $  1.49   $ 1.65
                 
  Weighted average common shares - diluted 30,052   29,671   29,994   29,592

 


 

Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets

(In thousands)
 
      September 30,   December 31,
      2017   2016
      (UNAUDITED)    
Current assets:      
  Cash and cash equivalents $328,894   $456,264
  Short-term investments 392,123   387,736
  Accounts receivable, net 419,708   372,348
  Inventories, net 601,571   524,961
  Other current assets 150,155   103,215
  Total current assets 1,892,451   1,844,524
           
Property, plant and equipment, net 500,687   488,614
Goodwill, net 520,706   477,115
Purchased intangibles, net 181,133   161,609
Other investments 1,032,801   830,790
Other assets   57,950   47,852
    Total assets $4,185,728   $3,850,504
           
           
Current liabilities:      
  Accounts payable, accrued payroll and employee benefits $273,958   $296,473
  Current maturities of long-term debt 452   334
  Income and other taxes payable 30,983   28,124
  Other current liabilities 161,063   146,391
    Total current liabilities 466,456   471,322
           
Long-term debt, net of current maturities 434,475   434,186
Other long-term liabilities 436,350   358,237
    Total liabilities 1,337,281   1,263,745
           
    Total stockholders' equity 2,848,447   2,586,759
    Total liabilities and stockholders' equity $4,185,728   $3,850,504

 


 

Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
      Nine Months Ended September 30,
      2017   2016
           
Cash flows from operating activities:      
  Cash received from customers $1,518,919   $1,530,605
  Cash paid to suppliers and employees (1,433,424)   (1,365,548)
  Interest paid, net (10,572)   (11,195)
  Income tax payments, net (39,821)   (37,373)
  Other operating activities (571)   4,825
  Net cash provided by operating activities 34,531   121,314
           
Cash flows from investing activities:      
  Payments for acquisitions and long-term investments (74,874)   (11,785)
  Other investing activities (87,615)   (151,972)
  Net cash used in investing activities (162,489)   (163,757)
           
Cash flows from financing activities:      
  Payments on long-term borrowings (220)   (231)
  Other financing activities (3,015)   6,422
  Net cash (used in) provided by financing activities (3,235)   6,191
           
Effect of foreign exchange rate changes on cash 3,823   (3,358)
           
Net decrease in cash and cash equivalents (127,370)   (39,610)
Cash and cash equivalents at beginning of period 456,264   457,549
Cash and cash equivalents at end of period $328,894   $417,939
           
           
Reconciliation of net income      
  provided by operating activities:      
Net income   $44,841   $48,695
Adjustments to reconcile net income to net cash      
  provided by operating activities:      
  Depreciation and amortization 106,051   110,156
  Changes in working capital (144,939)   (50,374)
  Other 28,578   12,837
Net cash provided by operating activities $34,531   $121,314