Bio-Rad Reports Second-Quarter 2017 Financial Results
HERCULES, CA -- (Marketwired) -- 08/03/17 -- Bio-Rad Laboratories, Inc. (NYSE: BIO) and (NYSE: BIO.B), a global provider of life science research and clinical diagnostic products, announced financial results today for the second quarter ended June 30, 2017.
Second-quarter 2017 net sales were $504.7 million, a decrease of 2.3 percent compared to $516.8 million reported for the second quarter of 2016. On a currency-neutral basis, quarterly net sales decreased 1.6 percent compared to the same period last year. The sales decline in the second quarter of 2017 was largely due to a slowdown in productivity related to the recent go-live of our global ERP system in Western Europe as well as the absence of sales that were pulled forward into the first quarter in anticipation of our ERP deployment.
The Life Science segment net sales in the second quarter of 2017 were $179.4 million, a decrease of 0.3 percent compared to the same period last year. On a currency-neutral basis, Life Science segment sales increased 0.3 percent compared to the second quarter of 2016. Currency neutral sales growth was primarily driven by sales of Droplet Digital PCR (ddPCR) instruments and reagents, offset by a decline in process chromatography media sales, as well as some of the ERP-related disruption mentioned above. Also, during the quarter the Life Science segment posted increases from the acquisition of RainDance Technologies. The currency neutral sales increase was reflected in North America, China, and Asia Pacific, offset by slowness in Europe, Latin America and Japan.
Net sales for the Clinical Diagnostics segment in the second quarter of 2017 were $322.1 million, a decrease of 3.5 percent compared to the second quarter of 2016. On a currency-neutral basis, sales decreased 2.7 percent compared to the same period last year. Results from the second quarter reflected a substantial slowdown of European sales, especially in infectious disease and immunohematology products, directly related to the disruptions post go-live of the new ERP system. The currency neutral sales results also reflected slowness in the Americas, partially offset by growth in Asia.
Net income for the second quarter of 2017 was $5.0 million, or $0.17 per share on a fully diluted basis, compared to $18.0 million, or $0.61 per share during the same period last year. Net income for the second quarter of 2017 versus the second quarter of 2016 was negatively impacted by the lower sales and corresponding lower gross profit as well as increased acquisition-related expenditures for new products and technology and higher expense for the implementation of new systems and operations in Europe.
"The second quarter of 2017 has been one of our most challenging with sales growth being significantly tempered by the slowing of productivity resulting from our major ERP deployment in Western Europe as well as from lower than expected sales in our process media business and in the Americas," said Norman Schwartz, Bio-Rad President and Chief Executive Officer. "These sales results, along with substantial spending related to implementing new systems and operations in Europe, as well as increased expenditures for newly acquired products and technology, combined to produce a disappointing operating result for the quarter. However, we remain confident that these investments will lead to increased sales and margin expansion over the coming years," added Mr. Schwartz.
The following table compares certain non-cash or non-recurring items from Q2 2017 to Q2 2016:
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(in millions) Q2 2017 Q2 2016
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Purchase accounting amortization
COGS $ 7.1 $7.2
SG&A $ 1.8 $1.7
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Acquisition-related expense
R&D $11.5 $2.4
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Contingent Consideration
SG&A ($1.3) ($0.6)
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Europe Restructuring $0.0 $11.7
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Total impact to operations $19.1 $22.4
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The effective tax rate for the second quarter of 2017 was a 350 percent benefit, compared to a tax rate of 33 percent for the same quarter in 2016. The unusually low tax rate used in the second quarter of 2017 reflects discrete tax benefits related to share-based compensation as well as the transfer of intangibles related to our European reorganization.
On a reported basis, net sales for the first half of 2017 increased 1.7 percent to $1.0 billion compared to $988.0 million for the same period in 2016. On a currency-neutral basis, net sales grew 2.3 percent.
Year-to-date net income for 2017 was $17.4 million, or $0.58 per share on a fully diluted basis, compared to $30.3 million, or $1.03 per share, respectively, during the same period in 2016.
2017 Financial Outlook For the full year 2017, the Company continues to anticipate currency-neutral organic sales growth of approximately 4 percent, which assumes a substantial portion of the lower revenue due to the transition to a new ERP system will be recovered by the end of the year. Further, the addition of the recently acquired RainDance Technologies could add up to another 1 percent of growth in sales for the full year.
With the lower than anticipated operating profit in the first half of 2017 and including the addition of RainDance, the Company is lowering its estimate for currency-neutral operating profit for the full year from the previously stated 7 percent of sales to now be in the 6 to 6.5 percent range.
"While 2017 will be another year of relatively modest operating margin especially with the inclusion of substantial acquisition-related expense, we are focused on completing these foundational investments and harvesting the benefits of a more efficient and cost effective operating model," Mr. Schwartz said. "We look forward to sharing more insight to our long term plans with the investment community at our Investor Day to be held in New York later this year."
Management will discuss these results in a conference call at 2 PM Pacific Daylight Time (5 PM Eastern Daylight Time) August 3, 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: 50367493. 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 (NYSE: BIO.B) 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, our ability to recover revenue, expectations regarding operating margin and foundational investments, realizing increased sales and margin expansion over the coming years, our expectations regarding the recently acquired RainDance Technologies 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, "believe," "expect," "anticipate," "may," "will," "intend," "estimate," "assume", "continue," 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 June 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.
Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2017 2016 2017 2016
----------- ----------- ----------- -----------
Net sales $ 504,666 $ 516,777 $ 1,004,717 $ 987,974
Cost of goods sold 231,367 236,545 461,431 443,713
----------- ----------- ----------- -----------
Gross profit 273,299 280,232 543,286 544,261
Selling, general and
administrative
expense 213,027 205,536 407,967 395,252
Research and
development expense 62,623 49,811 112,111 98,397
Impairment loss on
long-lived asset - 2,360 - 2,360
----------- ----------- ----------- -----------
Income (loss) from
operations (2,351) 22,525 23,208 48,252
Interest expense 5,770 5,632 10,811 11,212
Foreign currency
exchange losses, net 2,516 1,237 4,305 2,366
Other (income)
expense, net (11,757) (11,208) (13,175) (12,385)
----------- ----------- ----------- -----------
Income before income
taxes 1,120 26,864 21,267 47,059
Benefit (provision)
for income taxes 3,915 (8,850) (3,819) (16,769)
----------- ----------- ----------- -----------
Net income $ 5,035 $ 18,014 $ 17,448 $ 30,290
=========== =========== =========== ===========
Basic earnings per
share:
Net income per basic
share $ 0.17 $ 0.61 $ 0.59 $ 1.03
=========== =========== =========== ===========
Weighted average
common shares - basic 29,613 29,398 29,597 29,381
=========== =========== =========== ===========
Diluted earnings per
share:
Net income per diluted
share $ 0.17 $ 0.61 $ 0.58 $ 1.03
=========== =========== =========== ===========
Weighted average
common shares -
diluted 30,006 29,589 29,962 29,549
=========== =========== =========== ===========
Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2017 2016
-------------- --------------
(UNAUDITED)
Current assets:
Cash and cash equivalents $ 321,584 $ 456,264
Short-term investments 395,828 387,736
Accounts receivable, net 392,842 372,348
Inventories, net 580,581 524,961
Other current assets 135,693 103,215
-------------- --------------
Total current assets 1,826,528 1,844,524
Property, plant and equipment, net 503,329 488,614
Goodwill, net 530,287 477,115
Purchased intangibles, net 184,819 161,609
Other investments 1,040,959 830,790
Other assets 57,537 47,852
-------------- --------------
Total assets $ 4,143,459 $ 3,850,504
============== ==============
Current liabilities:
Accounts payable, accrued payroll and
employee benefits $ 277,566 $ 296,473
Current maturities of long-term debt 505 334
Income and other taxes payable 33,308 28,124
Other current liabilities 143,731 146,391
-------------- --------------
Total current liabilities 455,110 471,322
Long-term debt, net of current maturities 434,386 434,186
Other long-term liabilities 442,966 358,237
-------------- --------------
Total liabilities 1,332,462 1,263,745
Total stockholders' equity 2,810,997 2,586,759
-------------- --------------
Total liabilities and stockholders' equity $ 4,143,459 $ 3,850,504
============== ==============
Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Six Months
Ended June 30,
2017 2016
-------------- --------------
Cash flows from operating activities:
Cash received from customers $ 999,779 $ 1,020,149
Cash paid to suppliers and employees (970,116) (935,587)
Interest paid, net (10,315) (10,911)
Income tax payments, net (19,066) (11,085)
Other operating activities 5,918 7,141
-------------- --------------
Net cash provided by operating activities 6,200 69,707
Cash flows from investing activities:
Payments for acquisitions and long-term
investments (73,573) (11,477)
Other investing activities (74,102) (98,851)
-------------- --------------
Net cash used in investing activities (147,675) (110,328)
Cash flows from financing activities:
Payments on long-term borrowings (149) (156)
Other financing activities (246) 3,450
-------------- --------------
Net cash (used in) provided by financing
activities (395) 3,294
Effect of foreign exchange rate changes on
cash 7,190 (1,571)
-------------- --------------
Net decrease in cash and cash equivalents (134,680) (38,898)
Cash and cash equivalents at beginning of
period 456,264 457,549
-------------- --------------
Cash and cash equivalents at end of period $ 321,584 $ 418,651
============== ==============
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 17,448 $ 30,290
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 70,688 71,668
Changes in working capital (91,965) (54,026)
Other 10,029 21,775
-------------- --------------
Net cash provided by operating activities $ 6,200 $ 69,707
============== ==============
Investor and Financial Contacts: Bio-Rad Laboratories, Inc. Christine Tsingos Executive Vice President and Chief Financial Officer Ron Hutton Vice President, Treasurer 510-724-7000 Email Contact
Source: Bio-Rad Laboratories