Q4 2021 Bio Rad Laboratories Inc Earnings Call
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Speaker 1: of sales in Q4 of 2020.
Quarter of 2020.
Speaker 1: Q4 operating income was $107 million or 14.6% of sales compared to $175.2 million or 22.2% of sales into 4 of 20.
Q4, operating income was $107 million or.
Or 14, 6% of sales compared to $175 $2 million or 22, 2% of sales in Q4 of 2020.
Speaker 1: The lower year-over-year operating income was written by the significantly lower contribution from COVID-related...
The lower year over year operating income was driven by the significantly lower contribution from Covid related sales.
Speaker 1: the reduced COVID sales, negatively impacted needs, and along with supply chain constraints, contributed to lower wow…
The reduced Kobe sales negatively impacted mix and along with supply chain constrained contributed.
Contributed to lower manufacturing utilization.
In addition, Q4 of 2020 and benefited from the $32 million intellectual property settlement.
Speaker 1: Looking below the operating line, the change in fair market value of equity securities holdings, which are substantially related to bi-rate ownership of sartorial stage in shares, negatively impact the reported results by $2 billion and $153 million.
Looking below the operating line the change in fair market value of equity Securities Holdings, which are substantially related to <unk> ownership of Sartorius AG shares negatively impacted our reported results by $2 billion and $153 million.
Speaker 1: Also during the quarter, interest and other income resulted in a net benefit of $7.5 million, primarily driven by the investment income and compared to $1 million of expense last month.
Also during the quarter interest and other income resulted in a net benefit of $7 5 million.
Primarily driven by the investment income and compared to $1 million of expense last year.
Speaker 1: ECP's tax rate for the fourth quarter of 2021 was 22.8% compared to 22.2% for the same period in 2020.
The effective tax rate for the fourth quarter of 2021 was 22, 8% compared to 22, 2% for the same period in 2020.
Speaker 1: These tax rates were primarily affected by the change in value of the security holding.
The effective tax rates were primarily affected by the change in value of the security holdings.
Speaker 1: reported net loss for the fourth quarter was $1,574,000,000 and diluted loss per share were $52.59.
Reported net loss for the fourth quarter was $1 billion and $574 million and diluted loss per share was <unk> $52 59.
Speaker 1: This is a decrease from last year and is largely related to changes in valuation of the structural holdings.
This is a decrease from last year and is largely related to changes in valuation of the Sartorius holdings.
Moving on to the non-GAAP results.
Looking at our results on a non-GAAP basis, we have excluded certain atypical and unique items that impacted both the gross and operating margins as well as other income.
Speaker 1: Looking at the results on a non-get basis, we have excluded certain artificial and unique items that impacted both the gross and operating margins as well as other inputs.
Speaker 1: These items are detailed in the reconciliation table in the press release.
These items are detailed in the reconciliation table in the press release.
Looking at the non-GAAP results for the fourth quarter in cost of goods sold we have excluded $4 7 million of them.
Speaker 1: Looking at the non-get results for the fourth quarter, in cost of goods sold, we have excluded $4.7 million of amortization of purchased intangibles, a small restructuring, and non-recurring Womenln
Monetization of purchased intangibles.
Restructuring and nonrecurring items.
Speaker 1: these exclusions move the gross margin for the fourth quarter of 2021 to a non-get gross margin of 55.4% versus 58.2% in Q4 of 2020.
These exclusions moved the gross margin for the fourth quarter of 2021 to our non-GAAP gross margin of 55, 4% versus 58, 2% in Q4 of 2020.
Speaker 1: known as SGNA in the fourth quarter of 2021 was 30.2% versus 28.2% in Q4 of 2020.
non-GAAP SG&A in the fourth quarter of 2021 was 38, 2% versus 28, 2% in Q4 of 2020.
Speaker 1: in SG&A on a non-GAIC basis. We have excluded amortization of purchasing tangible of $1.8 million, an in vitro diagnostic registration fee in Europe for previously approved products of $1.6 million.
In SG&A on a non-GAAP basis, we have excluded amortization of purchased intangibles of $1 8 million.
In in vitro diagnostic registration fee in Europe for previously approved products of $1 6 million.
Speaker 1: legal related expenses of $900,000 and the restructuring related benefit of $1.4 million.
Legal related expenses of 900000, and the restructuring related benefit of $1 4 million.
Speaker 1: No one gets R&D expense in the fourth quarter of 2021 was 9.8% versus 8.7% in Q4 of 2020.
non-GAAP R&D expense in the fourth quarter of 2021 was nine 8% versus eight 7% in Q4 of 2020.
Speaker 1: In R&D, on a non-GAICS basis, we have excluded a $2 million restructuring benefit.
In R&D on a non-GAAP basis, we have excluded a $2 million restructuring benefit.
Speaker 1: A cumulative sum of these non-GET adjustments result in moving the quarterly operating margin from 14.6% on a GET basis to 15.4% on a non-GET basis.
The accumulative some of these non-GAAP adjustments result in moving the quarterly operating margin from 14, 6% on a GAAP basis to 15, 4% on a non-GAAP basis.
Speaker 1: This non-get operating margin compares to a non-get operating margin of 21.4% in Q4 of 2020.
These non-GAAP operating margin compares to a non-GAAP operating margin of 21, 4% in Q4 of 2020.
Speaker 1: We have also excluded certain items below the operating line, which are the decrease in value of the Sartorius equity holdings of $2 billion and $153 million, and about the $1.6 million loss associated with venture interest.
We have also excluded certain items below the operating line, which are the decreasing value of the sartorius equity holdings of $2 billion and $153 million and about a $1 $6 million loss associated with venture investments.
The non-GAAP effective tax rate for the fourth quarter of 2021 was 23% compared to 24, 3% for the same period in 2020.
Speaker 1: The non-get-assessive tax rate for the fourth quarter of 2021 was 20.3% compared to 24.3% for the same period in 2020.
Speaker 1: The lower rate in 2021 was driven by the geographic mix of _____.
The lower rate in 2021 was driven by the geographic mix of earnings.
And finally non-GAAP net income for the fourth quarter of 2021 was $97 million.
Speaker 1: And finally, non-GASnet income for the fourth quarter of 2021 was $97 million, or $3.21 diluted earnings per share, compared to $121 million and $4.01 per share in Q4 of 2020.
Or $3 21 diluted earnings per share compared to $121 million and $4 <unk> per share in Q4 of 2020.
Moving on to the full year results.
Speaker 1: Net sales for the full year of 2021 were $2.923 million on a reported.
Net sales for the full year of 2021 with $2 billion and $923 million.
On a reported basis.
Speaker 1: excluding the settlement for back royalties of 32 million dollars 2021 sales reached 2 billion and 891 million dollars which is 12.8 percent non-get revenue growth on a currency neutral basis.
Excluding the settlement torbeck loyalties of $32 million 2021 sales reached $2 billion and $891 million.
Which is 12, 8% non-GAAP revenue growth.
See neutral basis.
Speaker 1: COVID-related sales for the full year were about $266 million compared to $318 million in the year-ago period.
Colgate related sales for the full year, we're about $266 million.
Compared to $318 million in the year ago period on a currency neutral basis.
Core year over year revenue growth, which we define as currency currency neutral non-GAAP and exclude COVID-19 related sales was 17%.
Speaker 1: or year-over-year revenue growth, which we define as currency neutral non-get and excludes COVID-related sales, was 17%...
Sales of the life Science group for 2021, 1 billion and $401 million.
Speaker 1: Sales of the Livestimes Group for 2021 were $1 billion and $401 million.
Speaker 1: excluding the settlement for big royalties of $32 million. The year-over-year growth was 12.3% on a constant neutral basis.
Excluding the settlement for back royalties of $32 million the year over year growth was 12, 3% on a currency neutral basis.
When excluding Covid related sales life science year over year currency neutral growth was 23, 6%.
Speaker 1: When excluding COVID-related sales, life science, year-over-year currency neutral growth was 23.6%.
Speaker 1: The majority of the year-over-year growth was driven by our core PCR products, Droplet Digital PCR, Process Media, and Western Bloc.
The majority of the year over year growth was driven by our core PCR products droplet digital PCR process media and western blocks.
Speaker 1: On a geographic basis, Life Science is currently neutral. Full year-over-year sales grew across all three regions.
On a geographic basis life science currency neutral full year over year sales grew across all three regions.
Speaker 1: Sales of clinical diagnostics products for 2021 were $1 billion and $516 million, which is growth of 13.6% on a currency neutral basis.
Sales of clinical diagnostics products for 2021 were $1 billion and $516 million, which is growth of 13, 6% on a currency neutral basis.
Speaker 1: When excluding COVID-related sales, clinical diagnostics year over year, the currency neutral growth was 12.8%
When excluding corporate related sales clinical diagnostics year over year currency neutral growth was 12.8%.
Speaker 1: The strong year-over-year growth was driven by the overall recovery of routine...
The strong year over year growth was driven by the overall recovery of routine testing.
Speaker 1: On a geographic basis, clinical diagnostics' full year-over-year sales grew across all three.
On a geographic basis clinical diagnostics full year over year sales grew across all regions.
The full year non-GAAP gross margin was 57, 3% compared to 56, 9% in 2020.
Speaker 1: The full year non-get gross margin was 57.3% compared to 56.9% in 2020.
Speaker 1: The year-over-year margin increase was driven mainly by improved manufacturing deficiencies as a result of our various initial changes in the market.
The year over year margin increase was driven mainly by improved manufacturing efficiencies as a result of our various initiatives.
Full year non-GAAP SG&A as a percentage of sales was 28, 6% compared to 39% in 2020 and benefited from higher revenue despite increased employee related costs and discretionary expenses.
Speaker 1: Full year non-get SG&A at the percentage of sales was 28.6% compared to 30.9% in 2020 and benefited from higher revenue despite increased employee-related costs and discretionary expense.
Full year, non-GAAP R&D was $258 6 million.
Speaker 1: Full year long get R&D was $258.6 million or 8.9% of sales versus $227.9 million or 9.1% in 2020.
Or eight 9% of sales versus $227 9 million or nine 1% in 2020.
Speaker 1: And full year non-get operating income was 19.8% compared to 17% in 2020, representing significant year-over-year improvement in performance.
And full year non-GAAP operating income was 19, 8% compared to 17% in 2020, representing significant year over year improvement in performance.
Speaker 1: Lastly, the non-get effective tax rate for the full year of 2021 was 21.2%, which was consistent with our guidance.
Lastly, the non-GAAP effective tax rate for the full year of 2021 was 21, 2%, which was consistent with our guidance range.
Speaker 1: the 21.2% non-get effective tax rate for 2021 was lower than the 24% non-get rate for 2020 as a result of an increase in compensation related tax deductions.
One 2% non-GAAP effective tax rate for 2021 was lower than the 24% non-GAAP rate for 2020 as a result of an increase in compensation related tax deductions.
Moving on to the balance sheet.
Speaker 1: Total cash and short-term investments at the end of 2021 was $875 million, compared to $997 million at the end of 2020, and $1,343,000,000 at the end of 2021.
Total cash and short term investments at the end of 2021 was $875 million compared to $997 million at the end of 2020.
And $1 billion and $343 million at the end of the third quarter of 2021.
Speaker 1: The change in cash and short-term investments from the third quarter was primarily due to the loan to the Sartorius Herbs special-purpose entity and the payments for the drop-off acquisition, which was partially offset by cash flow generated from operations.
The change in cash and short term investments from the third quarter was primarily due to the loan to the sartorius Hertz special purpose entity.
Entertainment for the <unk> acquisition, which was partially offset by cash flow generated from operations.
During the fourth quarter, we did not purchase any shares of our stock and we had a total of $223 million available for potential share buybacks.
Speaker 1: During the fourth quarter, we did not purchase any shares of our stock, and we had a total of $223 million available for potential share by the end of the month.
Speaker 1: Full year share of Bidex was about 90,000 shares for $50 million.
Full year share buybacks was about 90000 shares for $50 million in.
Speaker 1: In 2020, we purchased about 292,000 shares of our stock for $100 million.
In 2020, we purchased about 292000 shares of our stock for $100 million.
Speaker 1: For the fourth quarter of 2021, net cash generated from operating activities was $157.9 million, which compares to $284.7 million in Q4 of 2020.
For the fourth quarter of 2021 net cash generated from operating activities was $157 9 million, which compares to $284 7 million in Q4 of 2020.
Speaker 1: This decrease mainly reflects change in working capital and lower operating profit.
This decrease mainly reflects change in working capital and lower operating profits.
Speaker 1: For the full year of 2021, net cash generated from operations was $656.5 million versus $575.3 million in 2020.
For the full year of 2021 net cash generated from operations was $656 5 million.
Versus $575 3 million in 2020.
Speaker 1: This increase mainly reflects higher full-year operating growth.
This increase mainly reflects higher full year operating profits.
Adjusted EBITDA for the fourth quarter of 2021 was 19, 1% of sales.
Speaker 1: It just says he did that for the fourth quarter of 2021 was 19.1% of.
Speaker 1: He adjusted EB-DAB in Q4 of 2020, was 25.2%
Adjusted EBITDA in Q4 of 2020 was 25, 2%.
Speaker 1: Full year adjusted EBITDA, including the Sartorial dividend, was $696.4 million, or about 24.1%, compared to 21.7% in 2020.
Full year, adjusted EBITDA, including the Sartorius dividend was $696 $4 million or.
Or about 24, 1% compared to 21, 7% in 2020.
Speaker 1: Net capital expenditures for the fourth quarter of 2021 were $43.2 million, and full year capex spend was $120.8 million.
Net capital expenditures for the fourth quarter of 2021 were $43 2 million in full year Capex spend was $128 million.
Depreciation and amortization for the fourth quarter was $33 7 million.
Speaker 1: Depreciation and amortization for the fourth quarter was $33.7 million and $133.8 million for the full year.
And $133 8 million.
For the full year.
Speaker 1: Moving on to the non-GIT guidance for 2022.
Moving on to the non-GAAP guidance for 2022.
Speaker 1: Overall, we are pleased with the performance in 2021, as the global economy is adapting to operating with COVID-19.
Overall, we are pleased with the performance in 2021 as the global economy is adapting to operating with Kobe.
Speaker 1: Going into 2022, we expect to continue the positive momentum that we established in 2021.
Going into 2022, we expect to continue the positive momentum that we established in 2021. However.
Speaker 1: However, we expect to see the ongoing supply chain constraints that we experienced in Q4 persist through the first half of 2020.
However, we expect to see the ongoing supply chain constraints that we experienced in Q4 persist through the first half of 2022.
Speaker 1: As a result, we anticipate a lower year-over-year growth in the first half of 2022, with higher growth in the dead half of the year.
As a result, we anticipate a lower year over year growth in the first half of 2022 with higher growth in the back half of the year.
Speaker 1: As mentioned earlier, we expect to recover in 2022 about $20 million of revenue carryover from 2021 related to supply chain construction.
As mentioned.
<unk> earlier, we have.
Expect to recover in 2022 about $20 million of revenue carryover from 2021 related to supply chain constraints.
Speaker 1: We are guiding the currency neutral revenue growth in 2022 to be between 1 and 2%, which includes about $70 million of COVID-related sales that are significantly subsiding from the prior two years.
We are guiding a currency neutral revenue growth in 2022 to be between one and 2% which includes about $70 million of Covid related sales that are significantly subsiding from the prior two years.
Speaker 1: Excluding COVID-related sales, we estimate currency neutral revenue growth in 2022 to be between 8.5 and 9.5%.
Excluding COVID-19 related savings, we estimated currency neutral revenue growth in 2022 to be between eight five and nine 5%.
Speaker 1: We estimate about 2 to 3 percent currency neutral revenue growth for the diagnostics group.
We estimate about 2% to 3% currency neutral revenue growth for the diagnostics group.
Speaker 1: The diagnostics group year-over-year revenue growth, excluding COVID, is expected to be between three and four percent.
The diagnostics group year over year revenue growth, excluding COVID-19 is expected to be between three and 4%.
Speaker 1: The Life Science Group year-over-year currency neutral revenue growth is expected to be between SLED and 1.5% As we project the COVID-related sales in 2022 to significantly decline...
The life Science group year over year currency neutral revenue growth is expected to be between flat and one 5%.
As we project that Covid related sales in 2020 tool to significantly decline.
Excluding COVID-19 related sales the life science grew year over year currency neutral revenue growth is expected to be between 16 and 18%.
Speaker 1: Excluding COVID-related sales, the Life Science Group year-over-year current once-neutral revenue growth is expected to be between 16 and 18% of the total sales.
Speaker 1: We continue to assume that we will experience quarterly revenue fluctuations for process media, although we estimate an overall double-digit growth for the full year.
We continue to assume that we will experience a quarterly revenue fluctuation for process media, although we estimate an overall double digit growth for the full year.
Speaker 1: Full year non-get gross margin is projected to be about 57.5%.
Full year non-GAAP gross margin is projected to be about 57, 5%.
Speaker 1: We plan to offset inflationary cost pressure with targeted price realization, particularly within the life science...
We plan to offset inflationary cost pressure with targeted price realization, particularly within the life Science group.
Speaker 1: Full year non-get operating margin is projected to be approximately 19%.
Full year non-GAAP operating margin is projected to be approximately 19%.
Speaker 1: We estimate the non-debt four year tax rate to be between 22 and 23 percent.
We estimate the non-GAAP full year tax rate to be between 22 and 23%.
Speaker 1: CAPEX is projected to be approximately $140 million.
Capex is projected to be approximately $140 million.
Speaker 1: and full year adjusted EBITDA margin to be between 23.5 and 23.8 percent.
And full year adjusted EBITDA margin to be between 23, five and 23, 8%.
Speaker 1: Lastly, I'd like to remind everyone that we will be holding an in-person investor day on February 25th at the New York Stock Exchange.
Lastly, I'd like to remind everyone that we will be holding an in person investor day on February 25th at the New York Stock Exchange.
Speaker 1: That concludes our prepared remarks and we will now open the line to take your questions. Operator.
That concludes our prepared remarks, and we will now open the lines to take your questions operator.
Speaker 2: Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.
Certainly if you would like to ask a question. Please press star followed by one on your telephone keypad.
The reason you would like to turn that question. Please press star followed by Q again to ask a question press Star one.
Reminder, if you are using a speakerphone. Please remember to pick up your handset before asking your question. We will pause here briefly a question are registered.
Speaker 2: The first question is from the line of Brandon Couillard with Jefferies. You may proceed.
The first question is from the line of Brandon Couillard with Jefferies. You May proceed.
Hey, Thanks, good afternoon guys.
Speaker 2: Maybe just starting with the outlook on the top line, I mean 9% growth in the base business, including 16 to 18% life sciences. It's pretty punchy and well above kind of what we're, I think, just accustomed to seeing how the buyer ran.
One maybe just starting with the outlook on the top line, 9% growth in the base business.
Including 16% to 18% life Sciences, it's pretty punchy and well above kind of what we're typically accustomed to seeing other bio rad.
Speaker 2: in a normal year, you just sort of elaborate on kind of the drivers of that strength, particularly life sciences and your level of visibility.
Normal year.
Sort of elaborate on kind of the drivers of that strength, particularly life sciences and your level of visibility.
Speaker 2: to hitting those targets and to what degree, if at all, you kind of embedded some, you know, conservatism perhaps from, you know, ongoing component shortages, I think like that.
It's hitting those targets and to what degree if at all kind of embedded some conservatism perhaps.
Ongoing component shortages.
Yes.
So, Brian and hi, actually advantage.
Speaker 3: So Brian , hi actually this is Andy. Yeah I think you know that the guidance reflects basically the execution of the core strategies that we've been pursuing for
Yes, I think that.
The guidance reflects basically the execution.
Core strategies that we've been pursuing for for the lifetime fitness the growth drivers.
Speaker 3: for the lifetime business and the growth drivers in...
Speaker 3: by our pharma, the ongoing growth in our digital PCR business, process Chrome etc. So you know it's certainly it's an improvement in growth rate.
Biopharma beyond.
Alright, great.
Good show.
Digital PCR based scenarios process chrome et cetera. So.
Sure.
Certainly its an improvement in growth rate.
Speaker 3: As to the component supply, so
As to the.
Component supply.
<unk>.
Speaker 3: We're seeing a challenge certainly in the first quarter and we see that extending a bit into the second quarter. But we do see line of sight to the end of those supply constraints and all being well, we'll see a good acceleration in the second half.
We're seeing a challenge certainly in the first quarter and we see that expanding our patients in the second quarter.
But we do see line of sight to the end of the supply constraints.
Well I would say a good acceleration.
<unk> in the second half.
Speaker 3: So I would say the performance is driven by the execution of our core strategies, which are playing out nicely in our various M-ups.
So I would say.
Performance was driven by the execution of our core strategies, which are playing out nicely.
Various end markets.
Speaker 1: Yes Brendan, I will highlight what I mentioned earlier, that the first half we anticipated the year of Eurobroke is going to be lower than the back half of the year.
Yes, Brendan highlight.
Highlights in our work.
Earlier that the first half we anticipate that the year over year growth is going to be lower in the back half of the year I mean that definitely will drive us to buy that way.
Okay, and maybe just on that alone.
Speaker 2: Okay, maybe just on that along here, any kind of color you can kind of share with us, and sort of how we should think about top line growth for the first half, or second half, and then first half maybe low singles, and then in the back half, you know, north of the top of the range for the full year? Any kind of— Yes, sir. And, always a swap out.
Color you can share with us in terms of how we.
If you think about top line growth in the first half versus second half.
Where does that maybe low singles and then in the back half.
Sure.
The range for the full year.
Hi, Catherine.
Speaker 1: Yeah, that's a fair assessment, Brandon. Low single in the first half and then accelerating in the second half. Overall, in the midpoint for the full year, that's among things above.
Yes, that's a correct assessment Brent on low single economic first half and then accelerating.
In the second half overall at the midpoint for the full year.
9%.
Speaker 2: Okay, gotcha. And then in terms of the margin outlook, I mean the 19% operating margin for the year, but is it better than we expected? Are you able to quantify the impact of the lower COVID revenues compared to what you're saying for base business margin expansion? And secondly, are you, do you expect to capture any benefit from the European restructuring in the second half?
Okay got you and then in terms of the margin outlook I mean, the 19% operating margin for the year a bit better.
We expect to be able to quantify the impact of the lower COVID-19 revenues.
Compared to what you are.
Base business margin expansion.
Are you.
Like to capture the benefit from the European restructuring in the second half.
Speaker 1: So, yeah, it's a great question, Brendan. We did not break down specifically the COVID-related kind of impact on the bottom line. However, you know, the guidance does make in the virus initiatives that we started, you know, last year, we do plan to have some realization of the benefits.
So great.
Great question Brandon.
We did not break down specifically the COVID-19 related.
Impact on the bottom line however.
The guidance does bake in the various initiatives that we started last year, we do plan to have some realization of the benefits in the back half of this year.
Speaker 1: in the back half of this year. So that's definitely a contributor. The mix this year, you know, and the fall through from a higher top line and higher utilization that we expect in the manufacturing footprint are also a contributor to the overall growth margin. On the other hand, you know, on the operating expenses, we do plan on incremental discretionary costs. We can always turn to the update.
So that's definitely a contributor.
The mix is.
Here in the fall through from higher top line and.
And high utilization that we expect in the manufacturing footprint are also a contributor to the overall gross margin.
The other hand on the operating expenses, we do plan on incremental discretionary costs in our returns will be office and an increased employee related costs. So that's the overall dynamic but.
Speaker 1: and increased employee related costs. So that's the overall dynamic, but I think I captured kind of for you most, most of the kind of levers that.
But I think a picture of kind of where you're most most of the kind of believers that lends to the guidance.
Speaker 2: Great. And, uh, can you give us sense of kind of what you're embedding for net pricing, uh, for the year? Thanks.
Great banking can you give us a sense kind of what you're embedding for net pricing.
For the year.
Thanks.
Can you say the question again please.
Speaker 2: Oh, pricing? Yeah, just around, you know, yeah, net pricing for the, for the full year. Yeah, the line.
Our pricing I talked around.
Yes, net pricing for <unk> for the full year.
The wildfires.
Speaker 3: Yeah, we're certainly looking to take pricing through where we can, but it's largely as an offset to basically cost inflation, raw material inflation that we're experiencing.
Yes, we're certainly we're certainly looking to take price tag pricing tree or wherever we can but it's largely been offset.
Basically cost cost inflation of raw material inflation that we're experiencing.
Speaker 3: So I think pretty much consistent with the rest of the industry right now, which is
Pretty much consistent with the rest of the industry right now Richard.
Speaker 3: know on the life science side we do see opportunity to essentially offset the cost drivers that are coming at us with some price improvements.
On the life science side, we do see opportunities.
Actually offset the cost or the cost drivers that are coming out this year.
With some price improvement.
Got you I'll hop back in queue.
Thanks.
Thank you.
Thank you Mr. Li.
Speaker 2: The next question is from the line of Patrick Donnelly with City. You may proceed.
The next question is from the line.
Patrick Donnelly with Citi you.
You May proceed.
Speaker 4: Hey guys, thanks for taking questions. Maybe you want on the supply chain. It might be for you, Andy. Can you talk about where the pressure points are? I mean, I know last quarter you can talk about it being a little bit of everywhere and a new kind of a new issue every week that you guys were able to handle. Is it still a little bit of that? And then again, encouraging to hear the line of sight that you guys feel this will lead.
Hey, guys. Thanks for taking the questions.
Maybe one on the supply chain might be for you Randy.
Can you just talk about where the pressure points are I mean, I know last quarter, you guys talked about it being a little bit of everywhere.
The new issue every week that you guys were able to handle because it's still a little bit of that and then again encouraging to hear the line of sight that you guys feel this will alleviate around the middle of the year.
Speaker 4: around the middle of the year. I guess just talk about that confidence level and do you expect things to continue to get pushed out? It was nice to see only a little bit of sale lost versus captured in one queue. Should we expect that trending?
Let's talk about that confidence level do you expect them to configure pushed out nice to talk to me a little bit of cell loss versus captured in <unk> should we expect that trend to continue.
Speaker 3: Yeah, so the supply constraints for the first part of your question, there is a little bit of randomness to it, you know, we have a very large portfolio as you know and they're mostly electronic components of different forms. It can be as simple as a power supply but a lot of it is chip related which is a broad global problem right now.
So service supply constraints for the first part of your question.
There is a bit of randomness tariff scenario.
Sure.
We have.
A very large portfolio.
And Diversely electronic components.
Different forms.
It can be as simple as a power supply.
All of it is the chip for <unk>, which is a broad global problem right now.
Speaker 3: And it's just very inconsistent and you believe you're going to get a certain component and then it doesn't arrive and You know you have to scramble so straight
And it's just very inconsistent when you believe youre going to get a certain component and when it doesn't drive them.
Perhaps the scrambled so sorry.
Speaker 3: challenging. The organization is doing extremely well to cope with...
Challenging the organization has done extremely well to cope with it.
Speaker 3: If you look into Q1 and through Q1 to Q2...
As we look into Q1 and through Q1 secured Sir.
Speaker 3: We do feel we're kind of in the thick of it and that we see Q2 will be
We do feel aware of were kind of in the back of it and that we say, we say Q2 will be.
Speaker 3: kind of supply catching up with demand.
Kind of in a supply catching up with demand.
Speaker 3: And that's our current line of sight. We're generally getting signs that component supply will come back more completely in Q2, so that's why we're guiding second half and it is a major acceleration.
And that's our that's our current line of sight.
Tom.
We're generally getting signs that composite supply will come back more completely than in Q2. So that's why we're guiding second half.
It is.
Major acceleration.
Speaker 3: The big challenge of course is to retain the orders through that period and in some parts of the portfolio we can definitely do that. In other areas it's much harder and we've considered that in our game.
The.
The Big Challenge of course is to return to retain the orders through that period in some parts of the portfolio. We can definitely do that in other areas. It's much harder.
We've considered that in our guidance.
Speaker 4: That's helpful. And then they need to circle back on the top line again like science.
That's helpful.
And then maybe to circle back on the topline again life science growth really strong and good to see can you talk about where we are in digital Pcr.
Speaker 4: growth really strong and good to see. Can you talk about where we are in digital PCR? Obviously, I'm sure we'll hear more about it in a couple weeks, but just in terms of the growth outlook, clearly, big driver this year feels like we're still early innings, but we love your perspective on what applications we're seeing kind of take off here, and then again, the growth outlook, the sustainability of this type of growth as this is a big driver.
Obviously I'm sure we'll hear more about it in a couple of weeks, but.
Just in terms of the growth outlook clearly big driver. This year feels like we're still early innings, but would love your perspective on what application, we're seeing kind of take off here and then again the growth outlook. The sustainability of this type of growth.
Big driver.
Yes.
Sure.
Speaker 3: Look, we remain very, very confident about the growth potential of digital, drop the digital PCR at another good year. Another good year is anticipated in our guidance, strong double digit. And I would say our strategy and focus areas remain consistent, you know, strong biopharma, performance.
Look we remain very very confident about the growth potential of <unk> to droplet digital Pcr.
Had another good year.
Another good year as anticipated in our guidance strong double digit.
And I would say our strategy and focus areas remain consistent strong biopharma performance.
Speaker 3: And just general end market adoption as a better and better understand the value proposition of high sensitivity but easy to use digital PTR. So there's nothing to suggest a slowdown in our...
And just general end market adoption.
Better and better understand the value proposition of <unk>.
Hi sensitivity.
Is it uses digital picture.
So there is nothing to suggest a slowdown.
Right now and Patrick are related obviously, an hour later this month and the Investor Day, We plan to yes, we will elaborate more and talk maybe a bit more of that.
Speaker 1: Patrick I will add that obviously you know later this month in the investor day we plan to yeah, we'll elaborate more and talk maybe a bit more about the umm or that are morebanks because we spring out with lockedock and you see the Nietzsche looks out here here and uhh the try portfolio that
The product portfolio that we're working on their future.
Speaker 4: Yeah, look forward to that. Alon, maybe one for you on the cap deployment side. You mentioned you did buybacking stock in 4Q. Given the market pullback in January , should we expect you guys are typically pretty opportunistic? Were you active on that front to start the year? And then secondarily, just your appetite? I know you guys have talked a little bit about good appetite for bolt-ons. Norm, if you have any perspective as well, that'd be great.
Yes look forward to that.
Maybe one for you on the cap deployment side, you mentioned you would buy back in stock in <unk>.
The market pullback in January should we expect you guys it could be pretty opportunistic.
Were you active on that front to start the year and then secondarily can you just your appetite I know you guys talked a little bit about your appetite for bolt ons.
Norm, if you have any perspective as well that'd be great.
Speaker 1: So, Patrick, obviously we were and still are in a quiet period, so we were not able to trade. But we'll definitely continue to be opportunistic. We have about 223 million in our plan. And we'll find the right timing to step in as similar to the past. We won't hesitate to be aggressive in case we find a way to do that.
Yes, so Patrick.
Obviously, we weren't at scale in a quiet period, so we were not able to trade.
But we will definitely continue to be opportunistic we have about 423 million.
In our plan and.
Find the right timing to step in as similar to the task.
Sure.
We wont hesitate to be interested in case, we find those opportunities.
Speaker 3: Yeah, certainly in the fourth quarter, you may remember we did manage to complete the acquisition to DropWorks. We bought ourselves kind of a platform in development for what I would call the entry level in DropIt Digital PCR. And as everybody adds to our portfolio, continue to have a...
Yes, certainly in the fourth quarter.
You May remember we did.
It didn't manage to to complete the acquisition of Dropbox.
What are some.
Kind of a platform in development for.
For what I'll call the entry level.
And competition PCR really adds to our portfolio.
Continue to have.
A number of opportunities in the queue.
Speaker 3: a number of opportunities in the queue, and we're working through them.
And we'll work apparel.
Great. Thanks, a lot.
Thank you Mr Donnelly.
Speaker 2: The next question is from the line of Dan Leonard with Wells Fargo. You may proceed.
Next question is from the line of Dan Leonard with Wells Fargo. You May proceed.
Speaker 4: Thank you for taking the question. So I want to circle back to a question Brandon asked earlier on the margin side. Your EBITDA margin guidance for 2022 puts you well in the range of what was your prior 2023 target without meaningful COVID revenue to contribute. So what's trending better than your initial plan? What would you point to?
Thank you for taking the question. So I wanted to circle back to your question Brandon asked earlier on the margin side. Your EBITDA margin guidance for 2022 puts you well in the range of what was your prior 2023 target without meaningful COVID-19 revenue to contribute.
We're trending better than your initial plan what would you point to.
Speaker 1: You know, in terms of the, it's probably a combination of top line growth mix that we do benefit from the overall mix, you know, all through to the growth margin.
In terms of the its probably a combination of topline growth.
The mix that we will benefit from the overall mix.
The fall through to the gross margin.
Speaker 1: And the TARES initiatives, the restructuring that we communicated early last year, there are additional initiatives that are ongoing in our operations in other areas. So it's probably throughout kind of the different land items of the P&L that gets us...
And.
The various initiatives I mean, the restructuring that we communicated early last year.
Our additional initiatives that are ongoing in our kind of operation and other areas. So its probably throw out kind of the different line items of the P&L.
It gives us.
Susquehanna.
Speaker 4: You mentioned a couple of times biopharma.
You mentioned a couple of times Biopharma.
Speaker 4: The last time you offered at your analyst's aid five years ago, proportion of revenue in life science coming from biopharma was pretty low. I think two-thirds of that life science segment was academic, actually. Has that mix meaningfully changed? Can you update us on what the proportion between academic and biopharma looks like in that business today?
The last time you offered at your analyst day.
Five years ago proportion of revenue in life science coming from Biopharma, that's pretty low I think two thirds of that life Science segment was academic actually.
Is that mix meaningfully changed can you update us on what the proportion between academic and Biopharma looks like in that business today.
Speaker 1: So then we do plan to provide an update on the investor day. I mean we're going to elaborate and you'll see the analysis there. I don't know Andy, today you... Well, I think we're fine tuning that set of numbers, so over at Patate, to communicate the numbers now that we end up changing, as we make sure they're fully packed for it's set.
So then what we do we will plan to provide an update on that in the Investor day, I mean, we're going to elaborate and youll see the analysis there are not any today.
Yes.
I think we are fine tuning that set of numbers. However at fate to communicate some numbers now that we are not changing our desperate make sure they're fully from Asia.
Accurate.
Speaker 1: We are tune fourth Ju, ne indefinitely, something that we plan to discuss.
We are at June .
Something that we plan to launch discussed during the Investor day.
Speaker 4: I look forward and then final question. What's your outlook for demand in China in 2022.
I look forward and then final question, what's your outlook for demand in China in 2022.
Speaker 5: I think our outlook in China is consistent with our recent history. We're largely under-penetrated in China, so for us we see China in particular and the whole Asia-Pac region as an upside opportunity. So, this is a moment that is simply a wonderful moment as a global secondary on Earth and the global filed strategy for President Trump. Now, the importance of Information upon Gardens is always a big part of the international
I think our outlook in China is consistent.
In our recent history.
We're largely under penetrated in China. So we're so for US we see China in particular in the whole Asia Pac region.
Outside of China.
As we.
Speaker 5: penetrate those markets in particular by a farmer and we're investing in the region so we're investing in our channel so for us it's a growth driver. under said I'll leave
Penetrate those markets in particular, Biopharma and we're investing in the region. So we are investing in our in our channels.
For us it fits.
Growth driver.
Understood I'll leave it there thanks for the time.
Thanks, Dan.
Thank you Mr. Wang.
Speaker 2: The next question is from the line of Jack Behan with Nefron Research. You may proceed.
The next question is from the line of Jack Meehan with Nephron Research you May proceed.
Thank you and good afternoon.
Speaker 6: Thank you and good afternoon. Wanted to go back just to clarify on the supply chain impact just as possible give a little bit more granularity on which products were impacted or break out that 30 million impact by division. And when do you when you expect the 20 million to hit G6 that had to come back more later in 2022.
I wanted to go back just to clarify on the supply chain impact.
Is it possible to give a little bit more granularity on which products were impacted or break out that $30 million impact by division and when do you. When do you expect the $20 million hit do you expect that to come back more later in 2022.
So it was predominantly on the life science side.
Speaker 5: So it was predominantly on the life science side, so very largely on the life science side of the business. Small impacts on the clinical side.
Every large player on the life science side.
Of the business.
Smaller and smaller impact on the clinical side.
Speaker 5: You know, and we don't see it coming back in one bowl.
And we've got to see it coming back in one borrowers I mean its complicated.
Speaker 5: you know, spread towards the latter part of Q2 and...
Brad towards the latter part of Q2 and answer the second half of the year.
Speaker 6: Okay, and then another question on digital PCR. So I was hoping you could just give a mark to market. What is the mix of this business now between recurring and capital if you look at the sales in 2021? And on the capital side was curious just with the introduction of QX1 a couple years ago, and then some of the innovation you're working on now, just the expectations for how is the capital piece been growing?
Okay.
And then.
Another question on digital PCR. So I was hoping you could just give a mark to market. What is the mix of this business now between recurring and capital. If you look at the sales in 2021.
And on the capital side was curious just with the introduction.
<unk> won a couple of years ago and then.
Some of the <unk>.
Innovation, you're working on now just the expectations for how is the capital piece and growing.
Speaker 7: This is Simon. Obviously over time we're seeing a healthy migration where that mix is concerned. Let's say you're at the present time, it's around 50-50 and we'd expect to see that continue to evolve in a positive direction.
Hi, This is Simon obviously over time, we're seeing a healthy migration where that mix is concerned on.
The present side is around 50 50.
Expect to see that continue to result in a positive direction.
And the and the capital piece, how have the new launches has been growing.
Speaker 6: in the capital piece how the new launch has been going.
Speaker 7: Yeah, QX1 has been very well accepted in the market. We've been happy with the upside of that.
Q1 has been very well accepted in the market, we've been happy with China.
Okay great.
Speaker 6: And then had one on Sartorius. So just looking at the balance sheet, so the stake came down to $14.4 billion in the quarter. So just was hoping you could help me with the math because Sartorius' share price actually was up almost 10% in the fourth quarter. I know it's come in the start of the year, but just help better understand why the value actually came down sequentially.
And then one on sartorius, so just looking at the balance sheet to the stake came down to $14 4 billion in the quarter.
So just was hoping you could help me with the math because sartorius as share price actually was up almost 10% in the fourth quarter I know its come in to start the year, but just.
Just better understand why the value actually came down sequentially.
Speaker 1: Sure, so Jack we hold two different shares. You have the ordinary shares of Sartorius and the preference shares, they're also traded separately. And they carry different values every day. And so we have two different stakes and probably that's for the difference that.
Sure So Jake we hold.
True differentiator. So you had the ordinary shares of sartorius and the preference share sales of traded separately.
And they carry different values every day and so we have two different states and probably this further difference.
That you've seen.
Speaker 6: OK. And last question. I think earlier today Sartorius talked about a higher dividend rate to start the year. Just hoping you could quantify what that means for Bio Rad and what I should be penciling in here in the first quarter.
Okay.
Last question I think earlier today sartorius talked about.
Higher dividend rate.
To start the year just was hoping you can quantify.
What that means for bio Rad, what I should be penciling in during the first quarter.
So.
We generally don't guide by quarter, but our current assumption.
Speaker 1: generally don't guide by quarter but you know our current assumption is about because we didn't know about the dividend that they're about to announce so our assumption was a flat different from last year so we will have to make in if there is any difference there. mmm, ok.--
It's about because we didn't know about the dividends that they are going to announce so our assumption was.
Flat dividend from last year, or so we will have to make if there is any difference there.
Okay sounds good thanks Ilan.
Thank you.
Thank you Mr Monahan.
Speaker 2: There are no additional questions waiting in queue at this time, so we'll pass the call back to Ed Chung for any closing remarks.
There are no additional questions waiting in queue at this time.
Now back to Ed for any.
Any closing remarks.
Speaker 3: Thank you for joining today's call. We appreciate your interest, and we look forward to connecting soon.
Thank you for joining today's call. We appreciate your interest and we look forward to connecting soon.
Goodbye.
That concludes today's bio Rad laboratories, Q4, and full year financial results Conference call. Thank you for your participation you may now disconnect your lines.
Speaker 2: That concludes today's BioRAD Laboratories Q4 and full year financial results conference call. Thank you for your participation. You may now disconnect your line.
Speaker 8: Chipotle
Okay.