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.
HERCULES, Calif.--(BUSINESS WIRE)-- Bio-Rad (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 | $4.9 | $7.2 | |||||
| SG&A | $ 2.4 | $1.7 | |||||
| Acquisition-related expense | |||||||
| R&D | $3.0 | - | |||||
| Contingent Consideration | |||||||
| SG&A | <$3.0> | <$0.3> | |||||
| Restructuring | |||||||
| SG&A | $0.8 | - | |||||
| R&D | $ 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.
| 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 | ||||||||
| Bio-Rad Laboratories, Inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (In thousands) | |||||||||||
| (UNAUDITED) | |||||||||||
| Nine Months Ended | |||||||||||
| 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 | |||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171102006749/en/
Contacts
Investor & Financial Contacts:
Bio-Rad Laboratories, Inc.
Christine Tsingos, 510-724-7000
Executive Vice President and Chief Financial Officer
investor_relations@bio-rad.com
or
Ron Hutton, 510-724-7000
Vice President and Treasurer
investor_relations@bio-rad.com
Source: Bio-Rad Laboratories, Inc.
View this news release online at:
http://www.businesswire.com/news/home/20171102006749/en
