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 fourth quarter and fiscal year
ended December 31, 2017.
Fourth-quarter 2017 net sales were $620.4 million, an increase
of 8.6 percent compared to $571.5 million reported for the fourth
quarter of 2016. On a currency-neutral basis, quarterly sales
increased 5.4 percent compared to the same period in 2016.
Fourth-quarter gross margin was 54.7 percent compared to 55.0
percent during the fourth quarter in 2016.
Life Science segment net sales for the fourth quarter were
$237.9 million, an increase of 15.0 percent compared to the same
period in 2016. On a currency-neutral basis, Life Science segment
sales increased by 12.3 percent compared to the same quarter in
2016. Currency-neutral sales growth was primarily attributed to
sales of Droplet Digital PCR, cell biology product lines, and
process media. The currency-neutral sales increase reflected growth
in North America, Europe, and Asia Pacific.
Clinical Diagnostics segment net sales for the fourth quarter
were $378.4 million, an increase of 4.9 percent compared to the
same period in 2016. On a currency-neutral basis, net sales were up
1.5 percent. Currency-neutral sales from the fourth quarter
reflected growth in blood typing, immunology, diabetes, and quality
control product lines. The currency-neutral sales increase for the
quarter was principally due to growth in EMEA, Asia Pacific, and
Latin America.
Net income for the fourth quarter of 2017 was $69.9 million, or
$2.32 per share on a diluted basis, compared to a net loss of $20.6
million, or ($0.70) per share on a diluted basis, during the same
period in 2016. Net income for the fourth quarter 2017 was impacted
by numerous non-cash or non-recurring items and by a substantial
benefit as a result of the 2017 Tax Cuts and Jobs Act.
The following table compares certain non-cash or non-recurring
items for Q4 2017 and Q4 2016:
(in millions)
Q4 2017 Q4 2016 Purchase accounting amortization COGS
$ 4.9 $ 4.5 SG&A $ 2.1 $ 1.7 Acquisition-related
expense R&D $ 5.5 - Contingent
consideration SG&A
($
6.4
)
$
1.8
Restructuring COGS $ 2.4 - SG&A $ 6.9 - R&D $ 15.9
- Legal matters COGS
($
11.0
) - SG&A $ 0.2 $ 10.9 Period Adjustment COGS $
9.3 -
Impairment of goodwill and long-lived
assets
$
11.5
$
59.9
Total impact to operations $ 41.3 $ 78.8
The effective tax rate for the fourth quarter of 2017 was an
85.5 percent benefit compared to a 27 percent benefit for the same
period in 2016. The lower effective tax rate is primarily due to an
estimated provisional tax benefit from the 2017 Tax Cuts and Jobs
Act (“Tax Act”) of approximately $66 million. The fourth quarter
tax rate includes a $121 million benefit for the remeasurement of
federal net deferred tax liabilities as a result of the reduction
in the corporate tax rate from 35 percent to 21 percent, offset by
a tax expense of $55 million for the mandatory deemed repatriation
on certain foreign earnings. The provisional estimate of the impact
of U.S. tax reform is based on our initial analysis of the Tax Act
and may be adjusted in future quarters.
Full Year 2017 Results
For the full year of 2017, net sales were $2,160.2 million
compared to $2,068.2 million in 2016, an increase of 4.4 percent.
On a currency neutral basis, sales increased by 3.5 percent.
Full-year gross margin was 55.0 percent, unchanged, compared to the
same period reported in 2016. Full-year reported sales for the Life
Science segment were $785.2 million, an increase of 7.5 percent. On
a currency-neutral basis, full-year sales increased 6.8 percent
compared to the same period in 2016. Full-year reported sales for
the Clinical Diagnostics segment were $1,360.8 million, an increase
of 2.8 percent compared to the same period in 2016, or an increase
of 1.6 percent on a currency-neutral basis.
Full-year net income in 2017 was $114.7 million, or $3.82 per
share on a fully diluted basis, compared to $28.1 million, or $0.95
per share in 2016. Net income for the full year 2017 was impacted
by numerous non-cash or non-recurring items and by a substantial
benefit as a result of the 2017 Tax Cuts and Jobs Act.
The following table compares certain non-cash or non-recurring
items for 2017 and 2016:
(in millions)
2017 2016 Purchase accounting amortization COGS $
21.9 $ 26.1 SG&A $ 7.9 $ 6.9 Acquisition-related
expense COGS $ 10.0 - R&D $ 20.0 -
Contingent consideration SG&A
($
20.1
)
($
0.4
) Restructuring COGS $ 2.4 $ 1.7 SG&A $ 8.5 $ 10.0 R&D $
23.5 - Legal matters COGS
($
10.4
) - SG&A
($
0.7
) $ 21.0
Impairment of goodwill and long-lived
assets
$
11.5
$
62.3
Total impact to operations $ 74.5 $ 127.6
The effective tax rate in 2017 was a 17.3 percent benefit
compared to an expense of 32.3 percent in 2016. The effective tax
rate for 2017 included a tax benefit of $66 million related to the
2017 Tax Cuts and Jobs Act. The effective tax rate for 2016
included additional tax liabilities for unrecognized tax benefits
of $17.5 million related to the non-deductibility of interest
expense in foreign jurisdictions.
“We are pleased with the growth and operating performance in the
fourth quarter and for the year,” said Norman Schwartz, Bio-Rad
President and Chief Executive Officer. “Reflecting on 2017, I would
describe it as a year of focus and accomplishment. We are beginning
to see the benefit of investments we have made over the past few
years along with changes to both our structure and operations. This
gives us good momentum as we enter 2018,” he said.
2017 Full-Year Highlights
- Full-year sales were $2,160.2 million
compared to $2,068.2 million in 2016. After normalizing for the
impact of currency, full year sales increased 3.5 percent.
- Year-over-year net income in 2017 was
$114.7 million, or $3.82 per share on a fully diluted basis,
compared to $28.1 million, or $0.95 per share, on a fully diluted
basis, in 2016.
- In January, Bio-Rad and Illumina, Inc.
(NASDAQ: ILMN) announced the launch of the Illumina® Bio-Rad®
Single-Cell Sequencing Solution, the first next-generation
sequencing (NGS) workflow that enables a deep view into the gene
expression of individual cells to better understand their functions
in complex tissues.
- In February, Bio-Rad acquired RainDance
Technologies, Inc. The intellectual property portfolio and product
lines of RainDance encompass a wide range of biological reactions
in droplets, with applications in life science research and
clinical research.
- Also during the first quarter, Bio-Rad
launched the ChemiDoc MP Digital Imaging System for imaging and
analyzing gels and western blots, offering precise, reproducible
fluorescence, chemiluminescence, and colorimetric gel and blot
detection, analysis, and documentation in a single system.
- In May, Bio-Rad announced that it had
received 510(k) clearance from the U.S. Food and Drug
Administration (FDA) for enhanced capability with its IH-Com data
management software to manage patient results with the company’s
IH-1000 automated blood typing instrument.
- In June, the company announced that it
had received FDA clearance for its BioPlex 2200 Syphilis Total
& RPR assay, a one-step universal testing method to aid in the
diagnosis of syphilis infection.
- In July, the company announced FDA
clearance for its BioPlex 2200 ToRC IgM Assay for the detection of
IgM class antibodies to Toxoplasma gondii, rubella, and
cytomegalovirus (CMV) offered in a multiplexed panel, offering a
rapid and comprehensive prenatal testing solution for three of the
most clinically significant diseases.
- Also during the third quarter, Bio-Rad
announced that the D-10 Hemoglobin A1c assay received clearance
from the FDA to aid in diagnosing pre-diabetes and diabetes,
augmenting the use of the company's D-10 System beyond a monitoring
method.
2018 Financial Outlook
For the full year 2018, the company anticipates currency neutral
revenue growth of approximately 3.5 to 4.0 percent and improved
profitability with a currency neutral operating margin target of 10
percent. Management will discuss this outlook in greater detail on
the fourth-quarter and full-year 2017 financial results conference
call.
“Looking ahead to 2018, we expect another year of growth in many
of our key product areas and geographies,” Mr. Schwartz said. “The
anticipated expansion in our operating margin for 2018 represents a
significant step toward achieving our longer term goal of an EBITDA
margin of 20 percent or better in 2020. Moreover, we will continue
to look for ways to deploy our capital in a manner that enhances
long-term shareholder value.”
Non-GAAP Reporting
Bio-Rad will begin to report non-GAAP results in the first
quarter of 2018. Non-GAAP results will exclude amortization of
acquired intangible assets, acquisition-related costs,
restructuring charges, asset impairment, valuation changes of
equity owned, and significant legal-related charges or benefits and
associated legal costs, and if applicable, duplicate or
non-recurring operating costs. The company will also exclude tax
effects associated with these exclusions as well as significant
discrete tax events. Management believes that these non-GAAP
measures will provide useful information to investors to evaluate
performance on an operational basis, provide quarter-over-quarter
comparisons excluding unusual items, show better comparisons among
company peers, and provide additional transparency to the financial
community.
Management will discuss fourth quarter and fiscal year ended
December 31, 2017 results in a conference call at 2 PM Pacific Time
(5 PM Eastern Time) February 27, 2018. Interested parties may
access the call at 855-779-9068 within the U.S. or 631-485-4862
outside the U.S., conference ID: 3097736. 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.
Bio-Rad, BioPlex, ChemiDoc, D-10, and Droplet Digital are
trademarks of Bio-Rad Laboratories, Inc. in certain
jurisdictions.
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 and solutions 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
research laboratories that include food safety and environmental
quality testing. Founded in 1952, Bio-Rad is based in Hercules,
California, and has a global network of operations with more than
8,000 employees worldwide. Bio-Rad had revenues exceeding $2.1
billion in 2017. 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,
momentum for our performance as we enter 2018, expectations
regarding the benefits of investments in our structure and
operations, anticipating growth and margin expansion in 2018 and
beyond, the significance of steps towards achieving our longer term
goal of an EBITDA margin of 20% or better in 2020, continuing to
look for ways to deploy our capital in a manner that enhances
long-term shareholder value, and our expectations 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, recent and planned changes to
our global organizational structure and executive management team,
our ability to compete effectively, foreign currency exchange
fluctuations, product quality and liability issues, our ability to
integrate acquired companies, products or technologies into our
company successfully, 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, its Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 2017, and its
Annual Report on Form 10-K for the fiscal year ended December 31,
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
December 31,
Year Ended
December 31,
2017 2016 2017 2016 Net sales $ 620,433
$ 571,453 $ 2,160,153 $ 2,068,172 Cost of goods sold 280,840
257,096 972,754 930,085
Gross profit 339,593 314,357 1,187,399 1,138,087 Selling,
general and administrative expense 204,206 220,020 808,942 816,724
Research and development expense 76,818 57,543 250,301 205,864
Impairment losses on goodwill and long-lived assets 11,506
59,945 11,506 62,305
Income (loss) from operations 47,063 (23,151 ) 116,650 53,194
Interest expense 5,506 5,096 21,914 21,942 Foreign currency
exchange losses, net 1,460 966 9,128 4,542 Other (income) expense,
net 2,414 (1,026 ) (12,197 ) (14,850 )
Income (loss) before income taxes 37,683 (28,187 ) 97,805 41,560
Benefit from (provision for) income taxes 32,216
7,617 16,935 (13,435 ) Net
income (loss) $ 69,899 $ (20,570 ) $ 114,740 $ 28,125
Basic earnings per share: Net income (loss) per basic share
$ 2.35 $ (0.70 ) $ 3.87 $ 0.96 Weighted
average common shares - basic 29,765 29,552
29,655 29,440 Diluted earnings
per share: Net income (loss) per diluted share $ 2.32 $ (0.70 ) $
3.82 $ 0.95 Weighted average common shares -
diluted 30,108 29,552 30,034
29,646 Note: As a result of the net loss for the
three months ended December 31, 2016, all potentially issuable
common shares have been excluded from the diluted shares used in
the computation of earnings per share as their effect was
anti-dilutive.
Bio-Rad Laboratories, Inc.Condensed
Consolidated Balance Sheets(in thousands)(UNAUDITED)
December 31,2017 December 31,2016
Current assets: Cash and cash equivalents $ 383,824 $
456,264 Short-term investments 376,714 387,736 Accounts receivable,
net 464,847 372,348 Inventories, net 594,804 524,961 Other current
assets 156,946 103,215 Total current assets 1,977,135
1,844,524 Property, plant and equipment, net 493,496 488,614
Goodwill, net 506,069 477,115 Purchased intangibles, net 174,113
161,609 Other investments 1,027,736 830,790 Other assets
93,472 47,852 Total assets $ 4,272,021 $ 3,850,504
Current liabilities: Accounts payable, accrued payroll and
employee benefits $ 306,814 $ 296,473 Current maturities of
long-term debt 420 334 Income and other taxes payable 39,941 28,124
Other current liabilities 155,521 146,391 Total
current liabilities 502,696 471,322 Long-term debt, net of
current maturities 434,581 434,186 Other long-term liabilities
404,404 358,237 Total liabilities 1,341,681 1,263,745
Total stockholders' equity 2,930,340
2,586,759 Total liabilities and stockholders' equity $ 4,272,021 $
3,850,504
Bio-Rad Laboratories, Inc.Condensed
Consolidated Statements of Cash Flows(in thousands)(UNAUDITED)
Year Ended
December 31,
2017 2016 Cash flows from operating
activities: Cash received from customers $ 2,093,948 $ 2,074,024
Cash paid to suppliers and employees (1,918,971 ) (1,810,844 )
Interest paid, net (21,124 ) (21,318 ) Income tax payments, net
(52,136 ) (38,442 ) Other operating activities 2,168
13,013 Net cash provided by operating activities
103,885 216,433 Cash flows from investing activities:
Payments for acquisitions and long-term investment (76,645 )
(14,165 ) Other investing activities (98,927 )
(199,715 ) Net cash used in investing activities (175,572 )
(213,880 ) Cash flows from financing activities: Payments on
long-term borrowings (316 ) (303 ) Other financing activities
657 9,323 Net cash provided by
financing activities 341 9,020 Effect of foreign exchange
rate changes on cash (1,094 ) (12,858 ) Net
decrease in cash and cash equivalents (72,440 ) (1,285 ) Cash and
cash equivalents at beginning of year 456,264
457,549 Cash and cash equivalents at end of year $ 383,824
$ 456,264
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 114,740 $ 28,125
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 148,682 142,897 Impairment losses on
goodwill and long-lived assets 11,506 62,305 Changes in working
capital (155,545 ) (10,367 ) Other (15,498 ) (6,527 )
Net cash provided by operating activities $ 103,885 $
216,433
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180227006628/en/
Investor & Financial Contacts:Bio-Rad Laboratories,
Inc.Christine Tsingos, 510-724-7000Executive Vice President and
Chief Financial Officerinvestor_relations@bio-rad.comorRon Hutton,
510-724-7000Vice President and
Treasurerinvestor_relations@bio-rad.com
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