Q2 2023 Danaher Corp Earnings Call
Speaker 1: You
Speaker 2: To all sites on hold, we appreciate your patience. Please continue to stand by. The program will begin in a few moments.
Speaker 1: The.
Speaker 2: My name is Ash and I'll be your conference facilitator this morning. At this time I would like to welcome everyone to the day in a hair corporation, 2nd quarter 2023 earnings conference call. I'll have a place on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during that time simply press stars in the number number
Speaker 3: Thanks for joining us on the call.
Speaker 3: With us today are Reiner Blair, our President and Chief Executive Officer, and Matt McGrew, our Executive Vice President and Chief Financial Officer.
Speaker 3: I'd like to point out that our Form 10Q for the second quarter, our earnings release, the slide presentation supplementing today's call, and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the investors section of our website.
Speaker 3: www.danneher.com under the heading Quarterly Earnings.
Speaker 3: The audio portion of this call will be archived on the investors section of our website later today under the heading Events and Presentations, and will remain archived until our next quarterly call.
Speaker 3: A replay of this call will also be available until August 8th.
Speaker 3: 2023.
Speaker 3: During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted.
Speaker 3: year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company specific financial metrics relate to the second quarter of 2023 and all references to period-to-period increases or decreases in financial metrics are
Speaker 3: We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets.
Speaker 3: During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings.
Speaker 3: and actual results may differ materially from any forward looking statements that we make today.
Speaker 3: These forward-looking statements speak only as of the date that they are made and we do not assume any obligation to update any forward-looking statements except as required by law.
Speaker 3: With that, I'd like to turn the call over to Reiner.
Speaker 3: Well, thank you, John , and good morning, everyone. I appreciate you joining us on the call today.
Speaker 3: Our team executed well and delivered our quarterly revenue, earnings, and cash flow expectations despite a more dynamic operating environment.
Speaker 3: The resilience of our portfolio showed through in the second quarter.
Speaker 3: High single digit base business core revenue growth in life sciences and diagnostics paired with better than expected respiratory testing revenue help offset software's base business demand and bio processing.
Speaker 3: Our team's ability to navigate these challenging operating conditions is a testament to their commitment to leading and executing with the Dan and her business system. Their actions are helping mitigate supply chain constraints, enhance productivity, and improve manufacturing throughput.
Speaker 3: and were proactively addressing structural costs while maintaining a healthy care of growth investments.
Speaker 3: Now, our second quarter results also highlight the durable, balanced positioning of our portfolio. We have an exceptional group of businesses, all powered by DBS, that serve attractive end markets with favorable long-term secular growth drivers. This powerful combination of our talented team and our
Speaker 3: The strengths of our portfolio and balance sheet optionality differentiates Dan and her and positions as well to operate through today's more dynamic and more dynamic and more dynamic
Speaker 3: operating environment.
Speaker 3: So with that, let's turn to our second quarter results and more detail. Thank you.
Speaker 3: Sales were $7.2 billion in the second quarter and core revenue declined 7%.
Speaker 3: We delivered 2% growth in our base business, which was more than offset by a COVID-19 revenue headwind of approximately 9%.
Speaker 3: Geographically, poor revenues and developed markets declined high single digits.
Speaker 3: primarily driven by lower COVID-19 revenues.
Speaker 3: High-glow markets declined low single digits with China down approximately 10%.
Speaker 3: In China, our diagnostics business has benefited from continued recovery in hospital patient volumes while stimulus initiatives help drive strength in life sciences.
Speaker 3: This was more than offset by decline in our biotechnology business, where a significant deterioration in the funding environment during the quarter led to project delays and an increase in order of cancellations.
Speaker 3: Our growth profit margin for the second quarter was 56.5%.
Speaker 3: Our operating margin of 20% was down 840 basis points due to the impact of lower volume in our biotechnology and diagnostic segments, and costs incurred to adjust our capacity and cost structure in response to COVID transitioning to an endemic state. These actions in this transition year.
Speaker 3: are intended to ensure that we're in the best position to deliver on our long-term growth and margin objectives while maintaining an accelerated cadence of innovation and bestness.
Speaker 3: Adjusted diluted net earnings per common share were $2.05.
Speaker 3: We generated $1.6 billion of free cash flow in the quarter and $3.3 billion year-to-date.
Speaker 3: This results in a year-to-date free cash flow to net income conversion ratio of more than 125%.
Speaker 3: Our notable strengths and free cash flow generation differentiate Dan Her and illustrates the quality of our portfolio, business models, and our team's consistent execution.
Speaker 3: Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today.
Speaker 3: Reported revenue in our biotechnology segment declined 17% and core revenue was down 16.5%. In bioprocessing, underlying market conditions weakened further as we moved through the quarter, resulting in a high single-digit-based business decline.
Speaker 3: Larger customers are still working through inventory they built during the pandemic emerging biotech customers which we define as customers without a commercialized therapy continued their efforts to conserve capital.
Speaker 3: In addition, we saw the ongoing bio-farm market correction in China intensify as the second quarter progressed.
Speaker 3: Given these dynamics, where we can, we've started actively working with our larger customers to help them more quickly manage their inventory down to normalize levels.
Speaker 3: Now while market dislocations are impacting our near-term growth, recent positive developments have only strengthened our conviction in the tremendous long-term opportunity ahead in the biologic markets and for our leading bioprocessing franchise.
Speaker 3: The number of biologic and genomic medicines and development is meaningfully higher than at any point in history. And during the quarter, we saw notable regulatory approvals for a novel gene therapy for Duchenne muscular dystrophy and the monoclonal antibody-based Alzheimer's therapeutic.
Speaker 3: These groundbreaking therapies are not only poised to improve quality of life for patients around the world, they're also serving as validation of these emerging therapeutic classes and reinforcing the potential of drugs currently in the development pipeline. Now in May, we completed the combination of Cytiva and Polylithium.
Speaker 3: with end-to-end solutions across all major therapeutic modalities and an innovation engine geared towards helping customers bring life-saving therapies to market faster and more efficiently. A great example is the Xcelrex X-Platform bioreactor Cytiva launched in the second quarter.
Speaker 3: Now this new bioreactors optimized to enhance cell culture productivity and increase process intensity to improve manufacturing yields. The X-platform's modular design also enables customers to more predictably scale from the lab to production across all modalities.
Speaker 3: including monopolelant antibodies and cell and gene therapies, helping reduce time and costs in biologic drug production.
Speaker 3: Turning to our life sciences segment, reported revenue grew 5.5% and core revenue was also up 5.5% including high single-digit growth in our base business. Thanks.
Speaker 3: Our life sciences instrument businesses collectively delivered mid-single digit core revenue growth led by nearly 10% growth at Leica Microsystems and high single digit growth at SCIEX.
Speaker 3: Healthy demand across our life science research, academic, and applied markets, particularly for our more advanced instrumentation, helps offset softness at pharma and biopharma customers. Our genomics consumables base business was up low single digits in the quarter.
Speaker 3: Growth in plasmids, proteins, and gene writing and editing solutions, which are primarily used in projects that are commercialized or in later stages of the drug development pipeline, and remain robust.
Speaker 3: This strength was partially offset by decline in next-generation sequencing and basic research.
Speaker 3: Our life sciences businesses continue to deliver innovative solutions that are helping accelerate the discovery and development of biologic medicine.
Speaker 3: IDBS recently released Polar Insight, a biopharma data management platform that is leveraging artificial intelligence to help researchers more quickly analyze datasets to accelerate drug discovery, regulatory filings, and technology transfer in the therapeutic development
Speaker 3: And Syax launched the Intobio ZT, a front end to the Xenotov.
Speaker 3: 7600 that enables research researchers to more quickly and more securely identify and validate drug candidates and proving development workflows and pipeline yields.
Speaker 3: Now moving to our diagnostic segment.
Speaker 3: Reported revenue declined 13 percent and core revenue declined 11.5 percent, with high single-digit growth in our base business more than offset by lower COVID-related respiratory testing volumes at Cepius.
Speaker 3: Our clinical diagnostics businesses collectively delivered mid-single-digit core revenue growth.
Speaker 3: Leica Biosystems led the way with high single digit core growth driven by strength and core histology and advanced staining.
Speaker 3: Beckman Coulter diagnostics was up mid-single digits again this quarter with solid performance across both instruments and consumables and notable strengths in immunoassay.
Speaker 3: In May, Beckman Coulter launched the DXI 9000, their next generation immunoassay analyzer that automates up to 90% of standard daily maintenance routines while delivering best in class throughput.
Speaker 3: In addition to significantly improving laboratory workflows and efficiency, the DXI 9000 will enable Beckman to provide a full menu of blood virus assays over time, closing an important menu gap, and further enhancing the breadth of the patient's blood pressure.
Speaker 3: and clinical value of our test menu. Now this is just one example of how the Beckman team is improving their competitive positioning through innovation, which is helping drive consistent mid-single-digit growth rates.
Speaker 3: In molecular diagnostics
Speaker 3: Broad-based strengths across CESTI's test menu drove another quarter of more than 30% core growth and non-respiratory testing. Customers who benefited from the workflow advantages, CESTI's gene expert delivered for COVID-related testing are increasingly adding additional assays from our leading test menu.
Speaker 3: most notably group-based strep and hospital acquired infection assays.
Speaker 3: And strong momentum for our recently introduced multiplex vaginitis panel, the ExpertXpress MVP, contributed to mid-teen's growth in sexual health testing.
Speaker 3: In COVID-related testing, Stesia's respiratory testing revenue of approximately $300 million in the quarter exceeded our expectation of $175 million.
Speaker 3: This was driven both by higher volumes and a preference for our 4-in-1 test for COVID-19, FluA, FluB, and RSV.
Speaker 3: We continue to expect approximately $1.2 billion of respiratory testing revenue for the full year.
Speaker 3: With COVID now an endemic state, we believe Cepheid is continuing to take share as many customers look to consolidate their point of care PCR testing platforms onto the gene expert for both respiratory and non respiratory testing.
Speaker 3: Their preference for the gene expert within their labs and across their health care networks is a testament to the significant value, the unique combination of fast, accurate, lab quality results and a best-in-class workflow provides clinicians.
Speaker 3: Now moving to our Environmental and Applied Solutions segment.
Speaker 3: Reported revenue grew 2% and core revenue was up 1.5%.
Speaker 3: Water quality core revenue grew mid-single digits, and product identification was down mid-single digits.
Speaker 3: In water quality, DDS lead execution drove solid growth on top of a double-digit prior year comparison.
Speaker 3: Strong performance at Temtreet and Hock was balanced across industrial and applied end wearo Fairfront.
Speaker 3: At Trojan, equipment sales and order rates remain strong as customers are continuing to invest in larger municipal projects.
Speaker 3: At product identification, Videojet declined low single digits against a high single digit prior year comparison. We're also seeing lower activity levels at our industrial and consumer packaged goods customers who are aligning their production schedules with end user demand. The Videojet team continued their strong cadence of new product innovation.
Speaker 3: and higher throughput.
Speaker 3: This is one of several product introductions planned for the year that are helping position the product identification platform for success as they begin their journey as part of Peralta.
Speaker 3: So speaking of RALTO, we remain on track for a fourth quarter 2023 separation. RALTO will be well positioned in some of the most attractive areas of water quality and product identification. Their portfolio will be comprised of leading companies with durable, high margin business models.
Speaker 3: supporting customers' mission-critical operations.
Speaker 3: The Veralto team is looking forward to hosting an analyst day in Chicago on September 6th, and we hope many of you will attend.
Speaker 3: So now let's briefly look ahead at expectations for the third quarter and the full year.
Speaker 3: In the third quarter, we expect core revenue in our base business to be down low single digits year over year.
Speaker 3: We also expect total core revenue to decline in the low to mid teens percent range, primarily as a result of lower demand for COVID-19 testing, vaccines, and therapeutics.
Speaker 3: Additionally, we expect a third quarter adjusted operating profit margin of approximately 26%, which includes the impact of efforts to adjust their cost structure and capacity in response to COVID transitioning to an endemic state, particularly within our diagnostics and biotechnology businesses. We expect a third quarter adjusted operating profit margin of approximately 26%, which includes the impact of efforts to adjust their cost structure and capacity in response to
Speaker 3: Now turning to the full year 2023.
Speaker 3: Due to the near-term challenges within bioprocessing, we now anticipate low single-digit core revenue growth in our base business.
Speaker 3: We also expect total core revenue to decline high single to low double digits for the year as a result of lower demand for COVID-19 testing, vaccines, and therapeutics.
Speaker 3: Additionally, we expect a full year adjusted operated profit margin of approximately 29%.
Speaker 3: So to wrap up, our team remains focused on consistent execution in the face of a challenging and more dynamic macroeconomic environment.
Speaker 3: We're confident about the bright future ahead for Danner. Our talented associates are innovative and passionate about their work and committed to our culture of continuous improvement. Across our portfolio, we're helping customers solve some of the world's biggest healthcare challenges.
Speaker 3: including faster, more accurate disease diagnosis and accelerating the discovery, development, and manufacture of therapies.
Speaker 3: Our solutions are at the forefront of improving patient outcomes and ensuring more patients around the world have access to quality care.
Speaker 3: Financially, we've got a great lineup of leading franchises in attractive end markets with durable high-recurring revenue business models and our strong free cash flow generation positions as well to further enhance our portfolio going forward.
Speaker 3: The unique combination of our talented team, differentiated portfolio, and balance sheet optionality, all powered by the Dan and Herb Business System, provide a strong foundation for creating shareholder value while helping to meaningfully improve human health.
Speaker 3: So with that, I'll turn the call back over to John . Thanks, Reiner. That concludes our formal comments. Operator, we're now ready for questions.
Speaker 2: Thank you. And at this time, if you would like to ask a question, please press star 1 on your touchtone phone. You may withdraw your question at any time by pressing star 2. Once again, that is star 1. And we will take our first question from Mike Ryskin with Bank of America. Please go ahead.
Speaker 4: Great. Morning, Mike. Thanks for... Good morning, Connor. Thanks for taking the question. I'll start on bioprocess, the obvious one. You provide a lot of comments during the prepared remarks, but I'm just wondering if you could talk a little bit about order trends, anything that you're seeing from customers to give you a sense of when that de-stocking could continue. As part of that, you also talked a little bit about actively managing.
Speaker 4: inventory with larger customers. Could you just walk us through what that means exactly and sort of how you see the rest of the year playing out? You know, you gave the total percent number, but qualitatively, what are your thoughts on bioprocesses as we go through the year?
Speaker 3: So let's start with orders.
Speaker 3: In, you know, the first half of the year our orders are essentially down 20%.
In Q4, as well and so there'll be a little bit dependent on how.
How much we can get done as to what the savings the annualized savings will be so we sort of told people last quarter that we kind of update that as we get.
Towards the guide for next year to kind of bake in some of the savings number so haven't really gotten that I've got a sensor an idea, but I do want to see if we can get everything done.
Kind of where we are where we ended up before we talk about how much is coming but I do think we've talked last quarter about that sort of a onetime benefit of call. It a couple hundred million Bucks.
Alright, that's helpful. Madden, Okay, guys. It wasn't clear to me why.
<unk> margins were down as it kind of price cost just because.
I'm assuming.
Maybe negative actual unit volumes with with.
With core up one five but is it mix price cost is there anything I know, there's probably some prep into the spend that may add some near term cost as well, but some color there would help too.
Yes, I would say, yes to probably all of the above Scott I think you are right.
It was a little bit of a price cost I think they are starting to see an environment where.
They had really good price actions as some of the supply chain issues.
And supply and logistics issues, they were able to kind of cover with price for that but I think youre right, where we're starting to see a little bit of that come down probably not terribly unusual.
They were able to offset with with with other measures, but youre right I think when you kind of look at what happened during the quarter. It was a little bit of it volumes were on the margin sort of down but price side did hold us up about pricing is coming down a little bit from where it was.
But.
That was.
Kind of what happened in the quarter and like you said also ramping up into into the into the spin here, probably had an impact as well.
Yes that makes sense. Thanks for the color and best of luck the rest of your guys.
Thanks, Scott Thanks, Scott.
Thank you and we'll take our next question from Dan Brennan with PD Cowen. Please go ahead.
Great. Thanks, Scott. Thanks, Good morning, Ryan how are you doing thanks, Scott Thanks for the questions here.
Maybe the first one just on.
The company is obviously superior to execute or DBS is that your core so that so the string of Bioprocess Guide downs is pretty uncharacteristic, but it's also.
A situation that has plagued many peers. So I'm sure you're always doing forensic review. So you go your future product future forecasting improves in terms of what you've learned so can you just give us.
Our sense of the latest Bioprocess guide.
What will provide confidence that the factors that surprise you here and led to the latest cuts won't surprise you again and now the guide incorporates enough cushion. So that investors can have confidence at the bottom of the bioprocess guidance has been reached.
Yes.
Thanks, Dan I appreciate that question and as you can imagine as you suggested we are constantly.
Continuously improving our forecasting processes, even when we get into these unusual circumstances.
And.
I think one of the aspects here is that the.
Demand situation that production planning of our customers around the world and the short term is very dynamic.
In the sense that production plans are being changed as our customers manage their own inventories as they deal with the demand patterns that they are exposed to.
And what we have learned out of that is a more frequent touch point.
Pattern that we have to have with our customers in order to ensure that we keep our finger on the pulse of what's going on there and we think that in the discussions that we've had.
Taking the approach of.
Aggressively, helping our customers manage their inventories to their target levels.
In order to find what the true demand signal is.
As well as thinking about the second half here with some degree of conservatism positions us well in what has been a very dynamic environment with a number of them.
New factors influencing demand.
So we think we're well positioned here for the remainder of the year in terms of the Bioprocess and guide.
Maybe Dan just.
Maybe just my thoughts on that topic.
Thanks, Mike Rogers said I think.
Even what we saw in Q2.
I think we feel like we've got sort of China.
In a pretty good place from a from a guidance perspective, given what we saw.
Given the fact that we began that active management in earnest in kind of the back half of Q2 and are going to be pretty aggressive with that to get everything possible behind us that we can here in 2023.
I think this guy and puts us in a pretty good place for the rest of the year.
Okay.
Great and then maybe just thinking about the exit rates that are implied in the guidance. I know you already commented Reiner 24 official guidance will come later, but it would be really helpful. Just to get some frame of reference about key inputs I mean, we're coming out somewhere at 930 this year on earnings.
And maybe a little below 10 Bucks, maybe $980 24, and what consensus is still $10 23 as of this morning.
Any any help about how we think about the trajectory in 'twenty four other from an earnings basis and also even given the low single digit base guide for this year, how do we think about that comp and what that could translate into a starting point for base organic growth and 24.
So Dan I do think that.
It's early to talk about 2024.
Because we still have an entire half of the year in front of US here with a number of factors to work through we talked about the destocking dynamic in China as well as our efforts to actively get stocking situation behind us here in 2023.
And we think that ultimately.
We're probably seeing in 2023, the bottom here and what is the bio processing stocking dynamic and we also and I talked about this in the prepared comments.
Our are positive about the long term growth of this business in this industry, but it's just too early to be putting down a marker here in July on how we think about 2024.
<unk> do promise to come back here later in the year to update and then of course, there's always provide our guide in January for 2024.
We'll take our next question from Tony Carter.
Leerink partners. Please go ahead.
Good morning.
Good morning, Eric and Matt Thanks for taking the question so.
First one.
On China beyond the comments, you made and the 50% expectation down for the rest of the year.
Orders being down wondering if there is anything fundamental in terms of the shift on the product portfolio.
We heard one of your bioprocess peers talk about competition on the less technology heavy products.
Im wondering if youre seeing any of that in any.
Share shifted there.
That is also happening in this market.
Puneet, our point of view on China is that the continuing deterioration as far more about demand and funding.
And then it is about local competition there the local competition has always been there no question during the pandemic local competition became more relevant as lead times.
Extended.
And and where we do see that local competition that tends to be more.
Sure.
Local.
China for China.
Therapeutics, then for products that find global application. So for US. This is really a topic at the margin.
And the real story here is that the funding environment.
As well as the stocking situation in China requires further mediation here in the second half.
And that's exactly what we're doing in order to get as much of this is possible behind us in 2023.
Okay. That's super helpful and then on the one.
One on capital deployment, if I may.
How are you thinking about capital deployment and now with the spin and the backdrop of somewhat of a REIT, rather weak and the market in the near term.
I know historically, you pursued leading assets that are usually gross margin accretive.
Wondering if any of that has changed and if you think services has gained more significance and your framework for capital deployment now thank you.
Sure So puneet for us M&A require.
It continues to be.
The primary form of capital deployment, and we do that when we see the end market.
Asset and the model the financial model align.
With our requirements.
And that is relevant for <unk>.
Any end market.
Or adjacency that we might be thinking about.
And we maintain a consistent perspective, there now having said that.
Likely noted that our balance sheet is in great shape.
We are in a market that provides.
The opportunity and we continue as we always do.
To work, our M&A funnel as defined.
Those opportunities where all three.
Lights flip the Green if you will market.
Company as well as the business model.
Okay.
Got it okay. Thank you guys.
Thank you.
We will take our next question from Rachel Zoe.
That install with Jpmorgan. Please go ahead.
Good morning, Rich good morning, Thank you for taking the questions.
So first off just kind of shifting gears that within our life Sciences business that was much better than expected this quarter and notably in strength strength was pretty strong with high single digit growth at <unk>, 10% growth that might catch so could you just walk us through really what drove that strength of instruments. This quarter and then some of your peers have called out meaningful slowdown when it comes to Capex.
And some of their customer segments for instrumentation. So are you seeing any of those same dynamics and how are you thinking about instrument growth. So that's all year.
Thanks for the question Rachel So as you suggested our Q2 life Sciences.
<unk> finished as expected up mid single digits and we.
We've been talking about a normalization process.
For some time now and and that's also what we're expecting going forward and I'll come back to that in a minute, but if we look at the strength here.
Mid single digits.
Geographically the U S was was okay I would exclude large large pharma, there and sort of small biotech where that's relevant.
<unk> Europe was solid and we also saw a good level of activity in China.
On the remainder of the stimulus for the subsidized loan program that China had in place.
Now from an end market perspective, we see the academic end market holding up well see the applied markets. If you think of food testing environmental testing.
With some strength.
And as I mentioned, we see biotech and pharma is softer.
And when you think about this from a product category perspective, we think.
Lower and.
Less expensive, perhaps even operating cost versus capital expenditure type of equipment.
Is impacted more severely than the higher end, which we still see a holding up and you saw that with Leica Microsystems and <unk> as well so as we think about the second half here, we continue to be cautious.
For a couple of reasons, we mentioned that.
China.
Market.
Strong.
B.
The subsidies there have a sunset at the end of the first quarter and we will have to see how that continues there is no news on that front going forward.
And so we think really the second half ends up being flat for life science instrumentation, putting the full year at low single digits as the.
The normalization process. If you will from what has been over several years now very elevated growth rates continues.
And Rachel that's sort of on the back to if you think about the bookings here I mean, our book to Bill in life Sciences in the instruments businesses was a little bit less than one in the quarter. So I think to Roger's point, we look at the first half year in China for life Sciences instruments that was largely a backlog play from stimulus.
And as we sort of head into the second half I think.
Our assumption is that we're going to be flat in those businesses as China stimulus backlog kind of rolls off does not have the impact that it had in the first half.
We just don't see a real step up here and stimulus in the second half.
Great. Thank you for all the color there maybe just a follow up on pricing and can you walk us through how much was pricing and impact for instruments in the quarter and what are you assuming for pricing on instruments in the back half of the year and then as a follow up just pricing on bioprocess. Thanks.
For Bioprocess thing it sounds like you took 350 basis points of pricing Q1what was that pricing contribution in Q2, and then how are you thinking about pricing evolving within bio processing in the back half of this year and also just heading into 'twenty for <unk>.
Last year, you guys took a 400 basis points of price in bio processing, obviously, the industry is pretty dynamic right now so any color there would be appreciated. Thank you.
Rachel overall, our pricing for the quarter. So overall danaher was up 350 basis points.
With with all four segments remaining above the historical average.
And specifically you were talking about life science instruments there.
There we saw in the quarter 450 basis points.
Price.
Now as we as we look forward for the remainder of 2023.
We do see that and expect that to moderate somewhat but we do expect to be above our historical averages here for the remainder of the year.
And as it relates to 2024, I think will come back to you on that as we get closer here to the end of the year.
Yeah.
Okay. We will take our final question from Luca <unk> with Barclays. Please go ahead.
Good morning, Larry Thanks, Lauren Thanks for squeezing me in here.
This is just kind of.
To follow up on Danny Brennan.
I know you guys aren't going to give 'twenty four given how everything is dynamic, but I think that.
The Destocking is what it is right that.
That's rolling off that shouldn't be 'twenty, four but that sets up an easy comp and so I was just trying to figure out right.
Right now what the industry demand is to support.
The type of overall industry growth so.
Typically the market growth.
Bio processing markets like high doubles still mid teens.
And thats in a normalized market and so how quickly do you think we can get back to that level and then on top of that you'll have the comps, which would take you over that or do you think that we're going to be in a period of subdued.
Contraction from a demand and.
Capacity perspective, given Covid rolling off you have China headwinds there.
There are several others.
The lack of biotech funding so give us a sense of what that normalized market looks like for you guys right now.
Look I mean, I, just keep coming back to July .
July .
Yes, we are.
We're in a pretty dynamic market.
<unk>.
Where we are within the industry and like you said Theres a theres a number of dynamics that still need to be worked through you mentioned some of them Destocking, China. The fact that we're sort of actively managing through this inventory situation.
I know why people are trying to get to a 24 number but I just think it's too early we just need to get through the second half, we'll get a better sense of how those dynamics play out which will give us a lot better.
Since as we get later in the year and into.
When we normally guide of what that looks like I, just think that there's so many moving parts right now that Unfortunately, I think we just we really do need to get through the second half here.
Yes, I understand.
And then I guess like can you can you quantify how much destocking was in the quarter for you guys and kind of year to date.
I mean I could probably.
Come up with some numbers, but it would be in precise I think the reality is is that it's going to be very customer dependent it's going to be manufacturing site dependent it's going to be drug dependent. So I mean, we don't we don't really spend a lot of time trying to figure out how much was destocking as much as spending time with the customers are pretty proactive way these days.
Two to understand what's on hand, what's the real need that you've got site by site by site. So.
So that we can help them manage down to an inventory level. They are comfortable with some are comfortable with getting down to where they were prepaying them exome or trying to get below that and some are trying to be above that actually so.
It is.
It's not one number that we manage to we're really doing it on a kind of indicative basis I don't know that Ive got a great <unk>.
For for a number but we're actively managing it and probably a way that was more active than we have them.
Gotcha, Alright fair enough. Thank you.
Thank you and I will now turn the call back over to Mr. John Bedford for closing remarks.
Thanks, everyone for joining us today and will be around the rest of the day for follow up questions. Thanks.
Thank you and this does conclude today's program. Thank you for your participation you may disconnect at any time.
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Hum.
Hum.
[music].
Hum.
[music].
Okay.
Okay.
[music].
Okay.