Q4 2023 Bio-Rad Laboratories Inc Earnings Call
Good afternoon, ladies and gentlemen interval Ken.
<unk> fourth quarter and full year 2023 earnings results conference call.
At this time.
Lines are in a listen only mode.
The presentation, we will conduct a question and answer session.
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I'd now like to turn the conference over to Edward Chang. Please go ahead.
Thanks Jenny.
Turning to everyone and thank you for joining US today, we will review the fourth quarter and full year 2023 financial results.
And update on key business trends for bio Rad.
Edward Chang: With me on the call today are Norman Schwartz, our Chief Executive Officer, Andy last Executive Vice President and Chief operating Officer.
Edward Chang: And Simon May President of the life Science group.
Edward Chang: Before we begin our review I would like to caution everyone that we will be making forward looking statements about management's goals.
Edward Chang: And expectations, our future financial performance and other matters. These statements are based on assumptions and expectations of future events cetera, subject to risks and uncertainties.
Actual results may differ materially from these plans goals and expectations.
You should not place undue reliance on these forward looking statements and I encourage you to review our filings with the SEC, where we discuss in detail the risk factors in our business. The company does not intend to update any forward looking statements made during the call today.
Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles.
Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release with that I will now turn over the call to Andy last <unk>, Our executive Vice President and Chief operating officer to provide an update on bio rads global operations.
Okay. Many thanks and good afternoon to everybody. Thank you for joining us.
For the fourth quarter of 2023 performed largely as expected.
Andy: Reflecting a continuation of the macroeconomic trends started earlier this year in the biotech and Biopharma segments.
Andy: China and geopolitical challenges relating to Russia.
However, our revenue picked up nicely compared to Q3 in both life science and diagnostics.
Although as expected we saw literally in the way of budget flush in the fourth quarter of this year for the life Science business.
Andy: During the quarter, we smoothed out the remaining operational challenges associated with our SAP go live in Q3 in Asia Pacific.
And we are now operating on a single Global instance of I'd say across all our operations.
Andy: In life Science, we experienced a double digit core business decline compared to Q4 prior year, where.
Andy: Well, we had challenging comparisons due to strong budget flush backorder burned down.
Andy: We benefited from the launch of the <unk> 600, DD Pcr platform.
Andy: We were pleased with the growth of our clinical diagnostics business in Q4, especially in Asia Pacific, where we prioritize placements to capture some strong growth trends.
Andy: Particularly in our diabetes testing franchise.
We are now past our supply chain challenges and finished the quarter with a more normalized year end backlog.
Overall, our DD PCR franchise had a soft 2023 with sales flat when excluding COVID-19 as compared to the high growth. We had previously been experiencing from our focus in biotech and Biopharma.
Andy: However, we remain very positive on maintaining our leading market share in the markets we serve.
And I'm looking forward to the impact of the <unk> to continue on the launch as we expand our focus on the lower end market later this year.
In addition, we continue to prioritize investment on application and assay expansion for the platform overall with further launches coming during the year.
Further we are excited about the launch of several other new life science products. This year, which include our new generation next generation <unk> Western blot platform.
And single cell DDC sample preparation solution.
We were pleased with the Q4 finish for our clinical diagnostics business.
Specialty double digit year end growth in Asia Pacific as a function of demand and priority placements, which helped us to deliver mid single digit growth overall for the quarter.
During 2023, our teams work hard on reducing our back of what is in the clinical business.
While bringing up Singapore to full production for the products transferred from trials.
We were pleased with the progress we've made on our core franchises and quality controls immuno hematology.
Diabetes I know what your immune net just the challenges in Russia and China.
In Q4 inventory levels remained high and similar to Q3 continuing to reflect some impacts of our manufacturing transfer clinical instruments from trials to Singapore, and also lower demand impacting inventory consumption and life Sciences.
We continued to exercise tight cost control in Q4, and this included lower employee related costs, reflecting reduced incentive compensation accruals.
Looking towards 2024 for our clinical diagnostics business.
We anticipate a more normalized year for customer demand.
Andy: However, we remain cautious on the pace of dynamics of recovery in our life Science business.
We expect the first half of the year to be a decline due to ongoing softness in biopharma and biotech and prior year compare.
But anticipate an improvement in the second half of the year its funding improves along with stabilization in the broader biopharma market.
The pace and shape of recovery in China remains uncertain, but China remains a priority market for future growth for the company.
Overall, we see 2024 is the recovery transition year with higher levels of uncertainty than usual for our life science business due to the anticipated second half improvements in biotech and Biopharma and the bioprocess and Destocking recovery.
Andy: On the latter point, we entered 2024 with a softer order book for process chromatography than the last few years.
Andy: Mostly related to a couple of large customers with at least one of our large customers still working off elevated inventory throughout the year.
Andy: On a positive note.
In addition, we are excited about the go live of our new Singapore DC towards the latter part of the year, which supports ongoing logistics improvements in the Asia Pacific region and globally for both businesses.
On the operating cost front, we have continued to make improvements in our cost structure.
However, we will see a material step up in cost in 2024 for employee incentive compensation accruals, which along with annual merit increases.
We will create a meaningful cost headwinds.
We also expect to see ongoing tightening of sanctions against Russia, making conditions for meeting demands for our clinical business increasingly more challenging there.
In closing we continue to drive forward on our strategy with focus on execution on our priority market segments and platforms.
Investing in process and efficiency gains around a single Global instance.
Maintaining our investment levels to drive innovation truck platforms.
Thank you and I'll now pass you to normal to review the financial results.
Norman Schwartz: Thank you Andy.
So first I'd like to review the results of the fourth quarter and the full year.
So net sales for the fourth quarter of 2023 were $681 2 million.
It's a six 7% decline on a reported basis versus $730 3 million in Q4 of 2022, and a seven 7% decline on a currency neutral basis.
Similar to the prior quarter, the fourth quarter year over year revenue decline was primarily the result of ongoing weakness in the biotech and Biopharma end markets.
Norman Schwartz: Yeah.
Again, primarily impacting sales of our life science segment products.
In addition, we continue to experience weak demand for life science products in China, and I think both as a result of the macro economic environment.
Norman Schwartz: Well it's.
Norman Schwartz: To some extent the local made in China initiatives.
Norman Schwartz: Covid related sales in the prior year with $13 4 million and immaterial in the fourth quarter of 2023 therefore.
Core revenue, which excludes COVID-19 related sales decreased 6.0% currency neutral.
And then on a geographic basis currency neutral revenue decreased year over year in the Americas in Europe and.
Norman Schwartz: And was relatively flat in Asia.
The sales of life Science group in the fourth quarter of 2023.
$291 1 million compared to $359 7 million in Q4 of 2022.
Which is a 19, 1% decline on a reported basis and 19, 9% on a currency neutral basis.
Excluding COVID-19 related sales for life science year over year currency neutral core revenue experienced a broad based decline of approximately 17%.
In addition to the challenging biotech biopharma end markets and soft macroeconomic conditions in China during the quarter.
Norman Schwartz: PCR in Q PCR sales faced difficult compares.
Due to the back quarter burn down and other factors Andy mentioned.
Norman Schwartz: In the year ago period.
And when excluding process chromatography sales the underlying life science business decreased 22, 1% on a currency neutral basis.
Versus.
And finally, the life Science group revenue, excluding process chromatography, and Covid related sales decreased 18, 7% currency neutral.
On a geographic basis life science year over year core revenue decreased across all three regions.
Conversely, we.
We saw broad based growth for the clinical diagnostics group.
Fourth quarter sales of clinical diagnostics group with $389 million compared to $369 6 million in Q4 of 2022.
This represents a growth of five 3% on a reported basis and four 2% growth on a currency neutral basis.
And then core clinical diagnostics year over year revenue, which excludes COVID-19 related sales increased four 3%.
Norman Schwartz: Yeah.
The clinical diagnostics group benefited from particular strength in diabetes product sales as well as from the reduction of elevated backfires.
Okay geographic basis, the diagnostics group revenue was primarily driven by strong growth in Asia.
For the company.
Q4 reported gross margin.
Was 53, 8% on a GAAP basis and compares to 54, 4% in the fourth quarter of 2022.
Norman Schwartz: The year over year gross margin decline was due to a number of factors, including lower manufacturing volume impacts of inflation and inventory reserves.
Amortization related to prior acquisitions recorded in cost of goods was $4 5 million as compared to $4 4 million in Q4 of 2022.
SG&A expenses for.
For the fourth quarter of 2023, or $207 1 billion or 34% of sales compared to $212 2 million or 29, 1% in Q4 of 2022.
The lower SG&A in the quarter was mainly due to lower employee related expenses, partially offset by a weaker dollar and a facility lease impairment.
And total amortization expense related to acquisitions recorded in SG&A for the quarter was $1 2 million versus $1 7 million in.
Q4 of 'twenty two.
Research and development expense in the fourth quarter was $63 9 million or nine 4% of sales compared to $66 2 million or nine 1% of sales in Q4 of 2022.
The lower expense levels reflect both lower employee related and project expenses.
Fourth quarter operating income was $95 3 million or 14% of sales compared to $118 7 million or.
Norman Schwartz: Or 16, 2% of sales in Q4 of 2022.
Norman Schwartz: Looking below the operating line.
Norman Schwartz: The change in fair market value of equity security holdings, which are substantially related to bio Rad ownership of Sartorius AG shares.
Added $324 $3 million of income to the reported results.
Norman Schwartz: During the quarter interest and other income resulted in net other income of $8 $8 million compared to net other expense of $6 $1 million last year, primarily driven by increased interest income from investments.
The effective tax rate for the fourth quarter of 2023 was 18, 4% compared to 24, 2% for the same period in 2022.
Tax rates for both years were driven by unrealized gains in equity securities and a lower rate in 2023 was primarily a result of changes in the geographical mix of earnings.
Norman Schwartz: Fourth quarter reported net income was $349 7 million or $12.14 diluted earnings per share.
<unk> to net income of $827 $7 million.
Or diluted earnings per share of $27 78 in Q4 of 2022.
Norman Schwartz: This change from last year is largely related to changes in the valuation of Sartorius holdings.
So moving on to the non-GAAP results.
Norman Schwartz: On a non-GAAP basis, we have excluded certain atypical and unique items that impacted both gross and operating margins as well as other income.
These items are detailed in the reconciliation table in the press release.
So looking at the non-GAAP results for the fourth quarter.
Cost to go goods, we have excluded $4 $5 million of amortization of purchased intangibles.
Norman Schwartz: More restructuring benefit.
These exclusions moved the gross margin for the fourth quarter of 2023 to a non-GAAP gross margin of 54, 4% versus 54, 9% in Q4 of 2022.
non-GAAP SG&A in the fourth quarter of 2023 was 29, 8% versus 28, 5% in Q4 of 2022.
Norman Schwartz: In SG&A on a non-GAAP basis, we have excluded amortization of purchased intangibles of $1 2 million.
Norman Schwartz: In in vitro diagnostics registration fee in Europe for previously approved products.
Norman Schwartz: One 8 million.
$851000 of restructuring related expenses.
non-GAAP R&D expense in the fourth quarter of 2023 was nine 1% based.
Norman Schwartz: Basically the same as 2022.
Norman Schwartz: You know R&D on a non-GAAP basis, we have excluded $1 $3 million and had restructuring expenses and $400000 in acquisition related costs.
And the accumulated the cumulative sum of.
These non-GAAP adjustments result in moving the quarterly operating margin from 14% on a GAAP basis to 15, 5% on a non-GAAP basis.
And this non-GAAP operating margin compares to a non-GAAP operating margin of 17, 4% in Q4 of.
2022.
We have also excluded certain items below the operating line, which are the increase in the value of sectorial equity holdings, and a loan receivable of $324 $3 million.
And a $965000 loss on venture investments.
The non-GAAP effective tax rate for the fourth quarter of 2023 was 22, 4% compared to 28, 1% for the same period in 2022.
The lower tax rate in 2023 was primarily driven by the geographical mix of earnings and a release of reserves related related to resolution of certain tax positions.
Norman Schwartz: And finally non-GAAP net income for the fourth quarter of 2023 was $89 $3 million or $3.10 diluted earnings per share compared to 98.
$5 million or diluted earnings per share of $3.31 in Q4 of 2022.
So and now for the full year results.
Net sales for the full year of 2023 were $2 billion $671 million, which is a four 7% decline on a reported basis as compared to two.
2.2 billion $802 million in 2022.
On a currency neutral basis full year 2023, net sales decreased four 1%.
Covid related sales for the full year were up about $4 million compared to $109 million in 2023 2022.
So that core.
Norman Schwartz: Year over year revenue, which excludes COVID-19 related sales decreased 0.4% or effectively flat on a currency neutral basis.
Now looking at full year sales results by segment.
Norman Schwartz: Our sales of the life Science group for 2023 were $1.178 billion.
Our year over year decline of 12% on a currency neutral basis.
When excluding Covid related sales life science year over year currency neutral core revenue declined four 9%.
The majority of the year over year decline was driven by process chromatography, Q PCR products and western blot.
Alright geographic basis life science currency neutral full year core revenue.
Norman Schwartz: Which as a reminder, excludes COVID-19 sales declined in Asia, and Europe, while the Americas posted modest growth.
Sales of the clinical diagnostic products for 2023 were $1.489 billion, which represents a three 2% growth on a currency neutral basis.
When excluding COVID-19 related sales the clinical diagnostics year over year currency neutral core revenue growth was three 4% and was driven by a diabetes quality control and blood typing products, partially offset by a decline in infectious disease products.
On a geographic basis clinical diagnostics currency neutral full year core revenue growth grew across all three regions.
Norman Schwartz: Overall company full year non-GAAP gross margin was 54, 2% compared to 50 656, 6% in 2022.
The year over year margin decline was driven mainly by product mix lower COVID-19 sales inventory reserves.
And lower fixed cost leverage.
35% of sales compared to $805 $4 million or 28, 7% of sales in 2022.
The higher SG&A was related to our SAP implementation in Asia legal fees at least impairment and higher discretionary spend.
Partially offset by lower employee related costs.
Norman Schwartz: Full year, non-GAAP, R&D was $254 $8 million or nine 5% of sales versus $256 $7 million or nine 2% of sales in 2022.
Norman Schwartz: Full year non-GAAP operating income was 14, 2% compared to 18, 7% in 2022.
Norman Schwartz: Which.
It reflects the effects of revenue decline shifts in mix and lower fixed cost absorption and lastly, the non-GAAP effective tax rate for the full year of 2023 with 22, 3% consistent with our guidance range and compares to 22% in <unk>.
2022.
So moving on to the balance sheet.
Total cash and short term investments at the end of 2023 with $1.613 billion compared to $1 billion $796 million at the end of 2022 and $1 billion $765 million at the end of the third.
Quarter of 2023.
Norman Schwartz: The change in cash and short term investments from the third quarter of 2023 was primarily due to share repurchases.
Working capital and the timing of tax payments.
Norman Schwartz: Yesterday.
Norman Schwartz: Just to mention we concluded a new $200 million credit agreement maturing and now in February of 2029.
Additional liquidity and enhances fire adds financial flexibility in this new credit line replaces a prior $200 million facility that was maturing in April of this year.
Norman Schwartz: Inventory at the end of Q4 increased slightly to $780 5 million from $775 8 million.
In the prior quarter and was primarily due to a higher level of finished goods.
If we move on from the supply chain challenges of the past two years, we continue to anticipate inventory decreasing to more normal levels over the next six to eight quarters.
Norman Schwartz: For the fourth quarter of 2023 net cash generated from operating activities was $81 million, which compares to 79 7 million in Q4 of 2022.
This increase mainly reflects changes in working capital offset by the timing of tax payments.
For the full year of 2023 net cash generated from operations was $374 9 million versus $194 4 million in 2022.
Norman Schwartz: This increase mainly reflects changes in working capital.
During the fourth quarter, we purchased 659000 shares of our stock for a total cost of $200 million or an average purchase price of approximately $303 per share as we continue to be opportunistic with our buyback program.
Probably useful to note, we still have nearly $280 million available for share repurchases under the current board authorized program.
Yeah.
And further just yet.
Just so you understand full year share buybacks totaled a $1 million.
268000 shares.
For approximately $429 million again, that's for the year as a comparison, we purchased about 479000 shares of our stock for $216 million in 2022.
Adjusted EBITDA for the fourth quarter of 2023 was $136 8 million or 21% of sales and adjusted EBITDA in the fourth quarter of 2022 was 21, 4%.
Full year, adjusted EBITDA, including the sectorial dividend was $535 $9 million or about 21%.
Norman Schwartz: Compared to 23, 8% in 2022.
Norman Schwartz: Net capital expenditures for the fourth quarter, 2023 were $42 $1 million and full year Capex spend was $156.5 million.
And finally, depreciation and amortization for the fourth quarter was.
$37 $2 million and $145 9 billion for the full year.
So moving on to the non-GAAP guidance for 2024.
So as Andy alluded to earlier, we do see 'twenty 'twenty four is recovery transition year with higher levels of uncertainty than usual for our life science business.
And a steady growth outlook for diagnostics.
Given the operating expense headwinds and muted revenue growth.
Norman Schwartz: I think it's fair to say that margin expansion it will be difficult this year.
Keep in mind that employee related expenses impacting our P&L represent somewhere between a 250 to 300 basis point headwind that we need to overcome in 2024.
And we have continuing geopolitical issues, especially as it relates to China and Russia.
Norman Schwartz: However, we remain.
As we remain focused on improving our cost structure.
Well positioned for operating margin leverage and and as revenue growth returns.
Again, I think you know 'twenty 'twenty four is is.
Certainly very different to a normal year.
This year revenue is expected to be a bit more backend loaded than usual based on the anticipated recovery in biotech and biopharma.
What's it quickly we do expect soft gross margin gross and operating margins in the first half of the year, particularly in the first quarter with improvements in the second half kind of in line with the market recovery and and a revenue normalization.
So with all that is that kind of a preamble here's how we see the year rolling out.
We are guiding a currency neutral revenue growth in 2024 to be between.
One and 2.5% overall.
Life Science grew year over year currency neutral revenue growth is expected to be between zero and 2% and for the diagnostics group, we estimate currency neutral revenue growth to be between two and a half and 3%.
With a backdrop of working to elevated bad quarters in the last year, we realized a little over 1% from price improvement at the corporate level.
Which was below inflationary trends to our overall cost.
We are targeting to achieve a similar level of price realization this year.
Mainly through the life Science group.
We'd also like to call out the sale of a non core contract manufacturing business in December that was part of a prior acquisition. This business. It is.
Reported under other operations contributed revenue of $3 million to $4 million annually, but had really a material an immaterial impact on our overall financial results.
Full year non-GAAP gross margin is protected at EBIT projected to be between 54, and 54, 5% with steady improvement anticipated throughout the year.
Gross margin for the first half of the year is expected to be below the full year range with the second half anticipated gross margin recovery driven by improved sales volume.
Norman Schwartz: Full year non-GAAP operating margin is projected to be between 13, 5% and 14%.
We estimate the non-GAAP full year tax rate to be between 22, and 23% and capex is projected to be approximately $160 million to $180 million.
Norman Schwartz: We continue to invest in our infrastructure to support our multiyear growth strategy.
Norman Schwartz: And finally full year non-GAAP EBITDA excluding.
Norman Schwartz: The sartorius dividend is expected to be between 18, and a half and 19% and when we include the recently announced reduced sartorius dividend. The adjusted EBITDA is expected to be between 19% and 19, 5%.
So in concluding today's prepared remarks.
Just a few comments about pirates ongoing corporate transformation.
And key accomplishments it maybe a little bit as a baseline for 2020 for I would say in spite of all the macro variables. We feel we have a good realistic outlook for 2024.
We're clear the pandemic, we've resolved our supply chain constraints, we successfully transitioned key diagnostics platforms to our Singapore manufacturing facility, we completed our global SAP implementation and I think most important we continue to make progress on our journey of transformation.
Norman Schwartz: In addition, as Andy mentioned, we have a number of exciting products in our pipeline pipeline to help US drive 2024, as we look forward to our life science markets recovering later in the year.
Certainly looking back over the last four years I think it's important to note that our underlying business has grown.
Norman Schwartz: At a currency neutral compound rate of four 6%.
Including I might mentioned life science, which is growing at over 8% overall I think we feel good that we're making solid progress and I do think we have a lot to look forward to.
Yeah.
That concludes our prepared remarks, and we will now open the lines to take your questions operator.
Yeah.
Yes. Thank you.
Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one you touched on filing.
Speaker Change: You will hear at retail and prompt acknowledging your request.
<unk> will be taken in the order received should you wish to cancel your request. Please press the star followed later too.
You are using a speaker phone please flip to handset before pressing any case once again that is star one should you wish to ask a question.
Speaker Change: Your first question is from Patrick Donnelly from Citi. Please ask your question.
Great. Thanks for taking the questions guys.
Norman I guess this would be for you on the margins.
Just in terms of the ramp throughout the year can you just talk about the moving pieces it sounds like.
Patrick Donnelly: The incentive comp is actually going to hit pretty hard here in the first half.
Norman Schwartz: Is it a bit of a Singapore ramp picking up steam in the second half is it volume leverage maybe just talk about the cadence and the ramp of that margin story throughout the year here and just kind of how we should think about the base.
Yeah, I think it's I think it really has it has a it has the most to do with the with the sales volumes.
You know, we get a lot of leverage from a from the sales and and and I think we should see that.
Norman Schwartz: Margins ramp with sales.
Speaker Change: Okay understood.
And then just on the CFO search.
Maybe can you provide an update of where we stand timing when that could happen.
<unk> got a few questions on I'm, just a little bit of update there would be helpful.
Yeah, we're really making good progress.
And.
Speaker Change: Candidly, we're hoping to have a new CFO on board by the next earnings call.
Okay, Alright next next few months.
And then maybe one last one just in terms of.
The outlook on on China, just how you guys are thinking about.
That region, both in the life science and diagnostics to maybe to get two different stories there.
So yes, just just kind of let us know what you're seeing there currently in each segment and the expectations for 'twenty four it would be helpful.
Yeah, Yeah, I I'd say near term.
It seems to be a kind of a tough market.
Not many signs of immediate recovery.
And get a little bit of uncertainty I think for us to win when we will see that.
Speaker Change: Thank you.
The good old days of double digit growth in China our.
I don't see that in the foreseeable future.
Speaker Change: For our life science business.
I think we've seen the you know the.
The impact of of a combined impact of you know that.
Speaker Change: The in China for China, anti corruption, and and and in general a kind of a tough funding environment affecting the business.
For diagnostics I think they were continuing to see steady growth.
But we do continue to also continue to carefully monitor the situation with these are these value based pricing tenders are.
Wondering if that may spread to some of our our platforms or some of our more specialty products from the from.
From the kind of high but.
Higher volume products that are that.
Speaker Change: <unk> seen that in the short term.
Understood. Thank you guys.
Thank you. Your next question is from.
Jack Meehan from Nephron research. Please ask your question.
Thank you good afternoon.
First question wanted to ask about the life Sciences business can you talk about so.
The script, you talked about how the PCR and DD PCR businesses kind of saw some backlog burn down could you talk about like how long you expect this to persist in 2024 and win.
That might start to turn the corner.
Yes.
Yeah. This is Simon I think would really largely through the backlog burn down compares as we head into 'twenty four I think the short answer is the slight pretty clean now we've obviously got a partnership with the macro conditions in parts of the business.
We referred to in the script.
H one.
Spikes to contrast, but as we're sitting here today, we don't see bought locked down as an issue going forward.
The call out sorry, just to add on some of the call out was against the 22 Q4 compares with life Science had a meaningful contribution from back book bottomed out.
Got it okay.
And then I was curious how process chrome play down in the quarter versus your expectations. I know you talked about starting the year with lower backlog there were there some larger than expected shipments in the quarter.
Speaker Change: Simon again, I think at a macro level, we saw the conditions that we've been talking about all year with Destocking continue to persist and again.
Thank Andy called out in the script as we enter Q1, our order book remains softer than we've seen in previous years I guess the follow on question there Isabelle always seeing any green shoots so there's certainly a lot of tentatively.
Isabelle: Encouraging data starting so we moved just when you look at our customer base.
We're seeing a number of our customers, we're really anticipating a going to be through the destocking impact seen in 2024, and we will see something like a return to normality, but at the same time, we got some logic customers to all the indications are theyre not.
And so I think that's gonna nets out to be tentatively we will see some recovery in the second half.
Still a fair amount of uncertainty around it.
Speaker Change: Great Okay.
And then last one.
Just was curious for any color on kind of below the line items within the guide for this year.
Just anything you would call out there I think sertorius announced their dividend for the year just.
Any color on that would be helpful.
Yeah. They are they did they did cut the dividend, we baked that into our guidance.
<unk>.
Speaker Change: And it's it's it's understandable given.
Given the kind.
It kind of cash constraints that they have.
Mhm.
Okay.
Speaker Change: Thank you.
Okay.
Thank you. Your next question is from Jon <unk> from UBS. Please ask your question.
Thank you very much.
I had another question about phasing for 2024, you mentioned that the year will be more back end loaded could you elaborate on that how much more backend loaded than typical.
Yeah, I'd say, it's a really good question.
Normally it's it's something like a you.
You know kind of more like 49 51, so when we think of a normal year and I think we're going to see a much Uh huh.
Wider spread than that.
For 2024, I think it's anybody's guess exactly what it's going to be but.
But I think we'll see a kind of a bigger delta between the first half in the second half.
Much wider than the two point spread typically.
Speaker Change: Yes, I think more closer towards four five points spread.
Between the first and second half then.
I appreciate that.
And can you share what are your growth assumptions for process chromatography draw.
Droplet digital Pcr.
And comment on weather.
A couple of these new product launches you talked about the continuum and the DTC.
Speaker Change: There'll be launched in time to contribute to the year.
Yes, Simon and again I think the process chromatography as I mentioned previously we've got these competing forces of accounts the other day.
Stopped in accounts that are still destocking.
The nuts.
He is going to be negative because of the accounts that all destocking.
Our larger accounts.
There's still some ongoing uncertainty around that.
Save the best rated the leaves that we've got right now is us mentioned for digital PCR and.
Challenging Q4 for reasons not to be mentioned in India and made it a challenging year as well as we look to 'twenty 'twenty four I think we're certainly seeing nice growth potential and digital PCR again, that's predicated to some degree on recovery of the Biopharma markets, where we've been.
Speaker Change: We've got a very strong existing positions that and also we've got some good new product launches coming out so the way I think about it is bio pharma market recovery on its new product introductions that both when not if events.
Speaker Change: For the full year I think we're looking at growth in digital Pcr.
Speaker Change: That's helpful. Thank you.
Thank you.
Your next question is from Harlan sur Mackinac from RBC capital markets. Please ask your question.
Speaker Change: Hey, guys. Thanks for taking the questions just on DD PCR can you talk about the growth in the quarter or negative growth on equipment versus consumables. Obviously, you had a tough comp on equivalent placements last year, but is there is there was there any consumable growth and how should we think about kind of the.
The consumable as a percentage of total DD PCR from here or does it go.
Yes, I think the show understood. There is again, primarily driven by Biopharma headwinds, we saw challenges in both instruments and consumables I'd say with approximately equal weighting.
We've got a healthy mix now overall in terms of consumables and instruments and again as the markets recover we think we're going to be the beneficiaries of that.
Okay, Great and then on.
On capital deployment, obviously, you've still got.
Some room on buybacks as buybacks.
Buyback still the priority or is or is there anything on M&A that you've seen them.
Opportunities open up or should we just think primarily about.
Speaker Change: Buybacks for 2024.
Yeah, we certainly.
As we mentioned we've got still several hundred million dollars authorized by the board and.
And we will continue to be optimistic optimistic with share repurchases, but but are you know we still have a focus to kind of continue to look for kind of good a complementary business opportunities to.
<unk>.
Things that are complementary to the business.
Probably no change in thinking around acquisitions, so it's a it's.
Kind of a two pronged approach could be buybacks could be could.
Could be some tuck in acquisitions.
Speaker Change: Alright, thanks for that guys a combination of both.
Speaker Change: Thank you.
There are no further questions at this time I will now hand, the call back to Edward Chang for any closing remarks.
Thank you for joining today's call we will be at the Citi Unplug Life Science access day in New York at the end of February and hope to see some of you there.
As always we appreciate your interest and we look forward to connecting soon bye bye.
Yeah.
Edward Chang: Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect.
Yeah.