Q1 2024 Bio-Rad Laboratories Inc Earnings Call

[music].

Yeah.

Well.

Standby were about to begin.

Operator: We stand by; we're about to begin. Good afternoon, everyone, and welcome to today's Bio Rad First Quarter 2024 Earnings Results Conference call.

Good afternoon, everyone and welcome to today's bio Rad first quarter 2024 earnings results Conference call. At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session you.

Operator: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. You may also withdraw yourself from the queue at any time by pressing star 2.

Operator: You May register to ask a question at any time by pressing star one on your telephone keypad.

Operator: You May also withdraw yourself from the queue at any time by pressing star two.

Operator: Also, today's call is being recorded, and I will be standing by should anyone need any assistance. And now, at this time, I'll turn things over to Mr. Edward Chung, Head of Investor Relations. Please go ahead, Mr. Chung.

Operator: Also today's call is being recorded and I will be standing by should anyone need any assistance and now at this time I'll turn things over to Mr. Edward Chang head of Investor Relations. Please go ahead Mr. Chung.

Edward Chung: Thanks, Bo. Good afternoon, everyone, and thank you for joining us. Today, we will review the first quarter of 2024 financial results and provide an update on key business trends for Bio Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer, Andy Last, Executive Vice President and Chief Operating Officer, and Roop Lakaraju, Executive Vice President and Chief Financial Officer. Before we begin our review, I would like to remind everyone that we will be making forward-looking statements about management's goals, plans, and expectations, our future financial performance, and other matters.

Edward Chung: Thanks, Bob.

Edward Chung: Turning to everyone and thank you for joining us.

Edward Chung: Today, We will review the first quarter of 2024 financial results and provide an update on key business trends for bio Rad.

Edward Chung: With me on the call today are Norman Schwartz, our Chief Executive Officer, Andy last Executive Vice President and Chief operating Officer, and Rupert Lock, Rajiv Executive Vice President and Chief Financial Officer.

Edward Chung: These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our 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 SEC filings, 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.

Edward Chung: Before we begin our review I would like to remind everyone that we are making forward looking statements about managements goals plans and expectations, our future financial performance and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially.

Edward Chung: 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.

Edward Chung: 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. With that, I'll now turn the call over to our CEO, Norman Schwartz.

Edward Chung: Finally, our remarks today will include references to non-GAAP financials, including net.

Norman D. Schwartz: Income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles.

Norman D. Schwartz: You should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release.

Edward Chung: I'll now turn the call over to our CEO Norman Schwartz.

Norman D. Schwartz: First, what I want to do is officially welcome and introduce Roop Lakkaraju, our new CFO. He comes to us with a wealth of financial and operational experience, which will certainly be valuable as we move forward. Roop has now been on board for about four weeks and is already contributing. In fact, he will walk you through our financial results for the first quarter in a few minutes.

Norman D. Schwartz: Thanks, Chad.

Edward Chung: First.

Norman D. Schwartz: I don't want to do is officially welcome and introduce a room like a ratio our new CFO.

Norman D. Schwartz: He comes to us with a wealth of financial and operational experience, which.

Norman D. Schwartz: Well certainly be valuable as we move forward.

Norman D. Schwartz: Group has now been on board about four weeks.

Norman D. Schwartz: And already contributing in fact, a roof will walk you through our financial results for the first quarter and that in a few minutes.

Norman D. Schwartz: I just want to say a few words. We have received questions about management turnover and succession in the last six months. I thought it would be useful to say a few words. So, in short, as I think about it, each of these discrete departures is really centered around personal decisions, either related to other opportunities or, or retirement. From my perspective, it's all part of a normal progression for these individuals and for the company.

Norman D. Schwartz: But just I just wanted to say a few words that you know we have received questions about about management turnover in succession in the last six months.

Norman D. Schwartz: I thought it'd be useful to say a few words.

Norman D. Schwartz: Thanks.

Norman D. Schwartz: So in short you know as I think about it you know each of these discrete departures.

Norman D. Schwartz: Really centered around personal decisions.

Norman D. Schwartz: Either related to other opportunities or.

Norman D. Schwartz: Or retirement.

Norman D. Schwartz: From my perspective.

Norman D. Schwartz: <unk>, it's all part of our normal progression for these individuals and for the company.

Norman D. Schwartz: And, of course, with all of these individuals, I just want to take a minute to recognize and thank them for their contribution. So as we move forward... We are making good progress filling some of these open positions. Some positions are being filled with external candidates, like Roop, which gives the company an opportunity to bring in fresh outside experience and perspective. And others are being filled with internal candidates, like Jim Berry, who we've recently announced as our new head of life science.

Norman D. Schwartz: And and and and of course with all of these individuals say just wanted to take a minute to recognize and thank them for their contribution.

Norman D. Schwartz: So as we move forward.

Norman D. Schwartz: We are making good progress filling some of these open positions.

Norman D. Schwartz: Physicians are being filled it with external candidates like roof, which gives the company an opportunity to bring in fresh outside experience and perspective.

Norman D. Schwartz: And others are being filled with internal candidates like Jim Barry who we've recently announced as our new head of life Science.

Norman D. Schwartz: Jim brings a deep understanding of the company.

Norman D. Schwartz: Along with significant expertise in a variety of areas.

Norman D. Schwartz: Jim brings a deep understanding of the company, along with significant expertise in a variety of areas. So as I think about it today, with Roop on board, the finance team is fully staffed, and we're close to an announcement on the new head of diagnostics. In addition, we have a good initial candidate pool for the COO position. You know, I do view these changes as opportunities to bring fresh insights and ideas to the table as we continue our transformational journey. So with that, maybe I'll turn the call over to Andy to provide an update on BioRAD's global operations. Okay, Andy? Okay.

Norman D. Schwartz: So as I think about it today with with real upon board.

Norman D. Schwartz: The finance team is fully staffed and.

Norman D. Schwartz: And we're close to an announcement.

Norman D. Schwartz: And a new head of diagnostics. In addition, we have good initial candidate pool for the.

Norman D. Schwartz: C O O position.

Norman D. Schwartz: Yeah, I do view these changes as opportunities to bring fresh insights and ideas to the table as we continue our transformational journey.

Norman D. Schwartz: So with that maybe I'll turn the call over to Andy to provide an update on.

Andy: <unk> global operations Sandy.

Andrew J. Last: Okay, thank you, Norman. Good afternoon, everybody.

Andy: Okay. Thank you gentlemen, and good afternoon, everybody. Thank you for joining us.

Andrew J. Last: Thank you for joining us. The first quarter of 2024 reflected a continuation of the same macroeconomic and market trends we had experienced in 2023 in the biotech and biopharma segments as well as in China and Russia. As a result, our life science group was in line with expectations and presented a soft quarter of sales with a year-over-year decline, which also reflected a tough comparison from Q1 of 23. In contrast, we were pleased with our clinical diagnostics group, which showed growth across all regions and provided a solid offsetting balance for overall Bio Rad sales.

Andy: For the first quarter of 2024 reflected a continuation of the same macroeconomic and market trends, we had experienced in 2023 and.

Andrew J. Last: In the biotech and Biopharma segments, as well as China and Russia.

Andrew J. Last: As a result, our life Science group was in line with expectations and presented a soft quarter sales with a year over year decline, which also reflected a tough comparison from Q1 of 'twenty three.

Andrew J. Last: In contrast, we were pleased with our clinical diagnostics group, which showed growth across all regions and provided a solid offsetting balance so overall buyer at sales.

Andrew J. Last: Our life science business experienced double-digit declines both across our core and bioprocessing product families. As previously communicated, our process chromatography sales, which have quarter-to-quarter lumpiness, were down significantly against a tough compare in Q1 2023. This reflects the general de-stocking trend across the industry and, for us, is the result of a few large customers still working through excess inventory. While we have seen indications of some customers starting to forecast purchase improvements, Overall, we are expecting a further decline in process chromatography sales this year. However, we have converted some early customers from competing residents to our platform during the first quarter, and we have not lost any customers.

Andrew J. Last: Our life science business experienced double digit declines both across our core and biased by a processing product families.

Andrew J. Last: As previously communicated our process chromatography sales.

Andrew J. Last: Which have quarter to quarter Lumpiness went down significantly against the tough compare in Q1 2023.

Andrew J. Last: This reflects the general destocking trend across the industry and for US is the result of a few large customers still working through excess inventory.

Andrew J. Last: While we have seen indications as some customers starting to forecast purchase improvements.

Andrew J. Last: Overall, we are expecting a further decline for process chromatography sales this year.

Andrew J. Last: However, we have converted some early customers from competing residents to our platform during the first quarter and have not lost any customers.

Andrew J. Last: As such, we remain positive on the long-term growth potential for this business. Overall, our core life science business, excluding process chromatography resins, declined in the mid-teens in all regions, which was in line with expectations. Notably, declines were concentrated in instrument sales, whereas consumable and reagent sales were essentially flat, both sequentially and year over year.

Andrew J. Last: As such we remain positive on the long term growth potential for this business.

Andrew J. Last: Overall, our core life science business, excluding process chromatography resins declined in the mid teens in all regions, which which was in line with expectations.

Andrew J. Last: Notably declines were concentrated in instrument sales, whereas consumable and reagent sales were essentially flat both sequentially and year over year.

Andrew J. Last: We are also looking forward to new product launches this year, more particularly the new Kami.gov platform and our new single-cell sample prep solution in Q2, and of course, the QX Continuum later in the year, all of which are contemplated in our outlook for the year. Our Droplet Digital PCR franchise was soft in Q1, again with a tough Q1 2023 compare. But the decline was single-digit compared to our overall core life science sales.

Andrew J. Last: We are also looking forward to new product launches. This year more particularly then you can't meet our go platform and our new single cell sample prep solution in Q2.

Andrew J. Last: And of course secure continuum later in the year all of which are contemplated in our outlook for the year.

Andrew J. Last: Our digital.

Andrew J. Last: Digital PCR franchise was soft in Q1 again with a tough Q1 2023 compare.

Andrew J. Last: But the decline with single digit compared to our overall core life science sales.

Andrew J. Last: During the quarter, we continued to make progress on our strategy, and we announced two deals in support of driving the penetration of the platform into advanced clinical diagnostics. The first, with Allegheny Health Network, is focused on generating clinical evidence across a range of cancer types using Biarrats droplet digital PCR technology for tumor-informed minimal residual disease monitoring of patients with solid tumor cancer following treatment. The second agreement is a collaboration with Oncocytes to commercialize their advanced transplant monitoring assays, deploying Bio Rad's QX600 droplet digital PCR system to provide a highly sensitive solution that could provide a more attractive alternative for laboratories that currently rely on centralized next-generation sequencing test providers. During Q1, we also released a new multiplex mutation detection assay providing a comprehensive status readout of mutations in ESR1, which is a key gene in breast cancer.

Andrew J. Last: During the quarter, we continued to make progress on our strategy and we announced two deals in support of driving penetration of the platform into advanced clinical diagnostic uses.

Andrew J. Last: The first with Allegheny Health network.

Andrew J. Last: He is focused on generating clinical evidence across a range of cancer types using bio Rad droplet digital PCR technology for tumor informed minimal residual disease monitoring of patients with solid tumor cancer following treatment.

Andrew J. Last: The second agreement is a collaboration with anchor sites to commercialize their advanced transplant monitoring assays deploying buyer at <unk> 600, droplet digital PCR system to provide a highly sensitive solution that could provide a more attractive alternative for laboratory that current real color.

Andrew J. Last: Really rely on centralized next generation sequencing test providers.

Andrew J. Last: During Q1, we also released a new multiplex mutation detection assay, providing a comprehensive status readout of mutations in ESR, one which is a key gene in breast cancer.

Andrew J. Last: We are very excited by the initial response we have seen for this assay. We're also pleased to see a key partner, Genoscopy, announcing FDA approval of ColoSense, their new non-invasive RNA-based colorectal cancer screening test that runs on our digital PCR platform. Moving on to our clinical diagnostics business, we were very pleased with the broad-based performance of our products in Q1, as we saw solid mid-single-digit growth compared to a softer Q1, 2023, with particular strength in Amir and Asia-Pacific.

Andrew J. Last: We are very excited by the initial response, we have seen for this assay.

Andrew J. Last: We're also pleased to see a key partner GNL Skippy announcing FDA approval of <unk>, the new noninvasive RNA based colorectal cancer screening test that runs on our digital PCR platform.

Andrew J. Last: Moving onto our clinical diagnostics business.

Andrew J. Last: We were very pleased with the broad based performance of our products in Q1, as we saw a solid mid single digit growth compared to a soft Q1, 2023 with particular strength in EMEA and Asia Pacific.

Andrew J. Last: Strong sales and quality controls, immunohematology, and diabetes were of note, and instrument supply for our clinical platform is now stabilized as we benefit from our new manufacturing facility in Singapore, which is fully operational. Reflecting on the first quarter's macroeconomic and market conditions, they broadly matched our expectations. We were pleased to see the positive trend for capital raises flowing into the biotech and biopharma markets, which is a prerequisite for second half growth, although we have not yet seen any signs of the funding making its way into orders. We expect this to be an impact in the second half of the year.

Andrew J. Last: Strong sales and quality controls immuno hematology and diabetes worth note and instruments supply for a clinical platform has now stabilized as we benefit from our new manufacturing facility in Singapore, which is fully operational.

Andrew J. Last: Reflecting on the first quarter's macroeconomic and market conditions, they broadly matched our expectations.

Andrew J. Last: We were pleased to see the positive trend for capital raises flowing into the biotech and Biopharma markets.

Andrew J. Last: Which is a prerequisite for second half growth, although we have not yet seen any signs if the funding making its way into orders and expect this to be a second half of the year impact.

Andrew J. Last: China remains soft for the life science business, although the Chinese government's stimulus announcement was encouraging for the longer-term recovery of the market. We also continue to negotiate the sanctions imposed on Russia, where we maintain supply of some critical clinical diagnostic products. In the U.S., finalization of the NIH budget was delayed until late March and at a slightly lower level than anticipated. And in the key European markets, government funding was more of a mixed bag, with Germany down and generally flat in the UK and France.

Andrew J. Last: China remained soft for the life science business, although the Chinese government stimulus announcement was encouraging for the longer term recovery of the market.

Andrew J. Last: We also continue to navigate the sanctions imposed on Russia, where we maintain supply of some critical clinical diagnostic products.

Andrew J. Last: In the U S. Finalization of the NIH budget was delayed until late March and at a slightly lower level than anticipated.

Andrew J. Last: And in the key European markets government funding was more of a mixed bag with Germany down and generally flat in the UK and France.

Andrew J. Last: With this backdrop in mind, we remain cautious on the magnitude and timing of the recovery in light science markets but are still anticipating improvements in the second half. We continue to expect normalized growth for our clinical diagnostics business in 2024. With that, I'll say thank you, and I'll now pass you to Rup to review the financial results.

Andrew J. Last: With this backdrop in mind, we remain cautious on the magnitude and timing of the recovery and life science markets, but I'll still ask anticipating improvements in the second half.

Rup: We continue to expect normalized drugs for our clinical diagnostics business in 2024.

Rup: And with that I'll say, thank you and I'll now pass you to route to review the financial results.

Roop Lakaraju: Thank you, Andy. I'd now like to review the results for the first quarter. Net sales for the first quarter of 2024 were $611 million, which is a 9.8% decline on a reported basis versus $677 million in Q1 of 2023. On a currency-neutral basis, the year-over-year revenue decline was 9.6%. As Andy mentioned, the year-of-year decline was primarily the result of ongoing weakness in key life science and markets, somewhat offset by steady growth in the clinical diagnostics group.

Rup: Thank you Andy.

Rup: Now I'd like to review the results for the first quarter.

Roop Lakaraju: Sales of the Life Science Group in the first quarter of 2024 were $242 million, compared to $324 million in Q1 of 2023, which is a decrease of 25.3% on a reported basis and a decline of 25.2% on a currency-neutral basis. The year-over-year decline impacted most product and geographic areas; excluding process chromatography sales, which can fluctuate quarter to quarter, life science group revenue decreased 16.6% Sales of the Clinical Diagnostics Group in the first quarter were $369 million, compared to $352 million in Q1 of 2023, which is an increase of 4.7% on a reported basis and 4.8% on a currency-neutral basis. Growth of the clinical diagnostics group was primarily driven by increased demand for quality controls, blood typing, and diabetes.

Roop Lakaraju: Net sales for the first quarter of 2024, 611 billion, which is a nine 8% decline on a reported basis versus $677 million in Q1 of 2023.

Roop Lakaraju: On a currency neutral basis, the year over year revenue decline was nine 6%.

Roop Lakaraju: As Andy mentioned the year over year decline was primarily the result of ongoing weakness in key life science end markets somewhat offset by steady growth of the clinical diagnostics group.

Roop Lakaraju: Sales of the life Science group in the first quarter of 2024 or $242 million compared to $324 million in Q1 of 2023, which is a decrease of 25, 3% on a reported basis and a decline of 25, 2% on a currency neutral basis.

Roop Lakaraju: Year over year decline impacted most product and geographic areas.

Roop Lakaraju: Excluding process chromatography sales, which can fluctuate quarter to quarter life Science group revenue decreased 16, 6% on a currency neutral basis.

Roop Lakaraju: <unk> of the clinical diagnostics group in the first quarter were $369 million compared to $352 million in Q1 of 2023, which is an increase of four 7% on a reported basis and four 8% on a currency neutral basis.

Roop Lakaraju: Growth of the clinical diagnostics group was primarily driven by increased demand for quality controls blood typing and diabetes.

Roop Lakaraju: On a geographic basis, currency-neutral year-over-year revenue for the Diagnostics Group posted balanced growth across all three regions. For the company, Q1 reported GAP gross margin of 53.4%, as compared to 53.5% in the first quarter of 2023, was in line with our expectations as we maintained a tight focus on manufacturing costs, which was partially offset by higher material costs and lower absorption. Amortization related to prior acquisitions recorded in cost of goods sold was approximately $4 million in both periods.

Roop Lakaraju: Geographic basis currency neutral year over year revenue for the diagnostics group posted balanced growth across all three regions.

Roop Lakaraju: For the company Q1 reported GAAP gross margin of 53, 4% as compared to 53, 5% in the first quarter of 2023 was in line with our expectations as we maintain a tight focus on manufacturing costs, which was partially offset by high higher material cost.

Roop Lakaraju: And lower absorption.

Roop Lakaraju: Amortization related to prior acquisitions recorded in cost of goods sold was approximately $4 million in both periods.

Roop Lakaraju: SG&A expenses for Q1, 2024, were 215 million, or 35.2% of sales compared to 226 million, or 33% in Q1 of 2023. The decrease in SG&A spend was driven by the positive impact of our previously discussed cost reduction initiatives, including lower employee-related expenses and discretionary spend, as well as higher restructuring charges in the year-ago period.

Roop Lakaraju: SG&A expenses for Q1, 2024 were $215 million or 35, 2% of sales compared to $226 million or 33% in Q1 of 2023.

Roop Lakaraju: The decrease in SG&A spend was driven by the positive impact of our previously discussed cost reduction initiatives, including lower employee related expenses and discretionary spend as well as higher restructuring charges in the year ago period.

Roop Lakaraju: Total amortization expense related to acquisitions recorded in SG&A for the quarter was approximately $1 million versus approximately $2 million in Q1 of 2023. Research and development expense in the first quarter was $66 million or 10.9% of sales compared to $75 million or 11.1% of sales in Q1 of 2023. The year-over-year decrease was primarily due to decreased employee-related expenses and lower restructuring costs.

Roop Lakaraju: Total amortization expense related to acquisitions recorded in SG&A for the quarter was approximately $1 million for versus approximately $2 million in Q1 of 2023.

Roop Lakaraju: Research and development expense in the first quarter was 66 million or 10, 9% of sales compared to $75 million or 11, 1% of sales in Q1 of 2023.

Roop Lakaraju: Year over year decrease was primarily due to decreased employee related expenses and lower restructuring costs.

Roop Lakaraju: Q1 operating income was $45 million, or 7.3% of sales, compared to $62 million, or 9.1% of sales, in Q1 of 2023, primarily due to lower sales versus the year-ago period, which were partially offset by our expense management initiative. Looking below the operating line, the change in fair market value of equity security holdings, which are substantially related to Bio Rad's ownership of Sartorius AG's shares, added $422 million of income to the reported results.

Roop Lakaraju: Q1, operating income was $45 million or seven 3% of sales compared to $62 million or nine 1% of sales in Q1 of 2023, primarily due to lower sales versus the year ago period, which were partially offset by our expense management initiatives.

Roop Lakaraju: Looking below the operating line the change in fair market value of equity security holdings, which are substantially related to buyer adds ownership of Sartorius AG shares added $422 million of income to the reported results.

Roop Lakaraju: During the quarter, interest and other income resulted in net other income of $24 million compared to net other income of $40 million last year. The primary driver of the year-over-year change is the lower Sartorius dividend, which declined to $18 million in Q1 of 2024 versus the quarter of 2023. The effective tax rate for the first quarter of 2024 was 21.8% compared to 18.7% for the same period in 2023. The effective tax rate reported in these periods was primarily affected by the accounting treatment of our equity securities.

Roop Lakaraju: During the quarter interest and other income resulted in net other income of $24 million compared to net other income of $40 million last year.

Roop Lakaraju: The primary driver of the year over year change is the lower sartorius dividend, which declined to $18 million in Q1 of 2024 versus the quarter of 2023.

Roop Lakaraju: <unk> tax rate for the first quarter of 2024 was 21, 8% compared to 18, 7% the same period in 2023.

Roop Lakaraju: The effective tax rate reported in these periods was primarily affected by the accounting treatment of our equity securities.

Roop Lakaraju: First quarter reported net income was $384 million, or $13.45 diluted earnings per share, compared to net income of $69 million, or a diluted earnings per share of $2.32, in Q1 of 2023. This change from last year is largely related to changes in the valuation of our sartorius holdings. Moving on to the non-GAAP results, looking at the 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. These items are detailed in the reconciliation table in the press release.

Roop Lakaraju: First quarter reported net income was $384 million or $13 45 diluted earnings per share compared to net income of $69 million or diluted earnings per share of $2 32.

Roop Lakaraju: In Q1 of 2023.

Roop Lakaraju: This change from last year is largely related to changes in the valuation of our Sartorius holdings looking.

Roop Lakaraju: Moving on to the non-GAAP results.

Roop Lakaraju: Looking at the 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. These items are detailed in the reconciliation table in the press release looking.

Roop Lakaraju: Looking at the non-GAAP results for the first quarter, in cost of goods sold, we have excluded approximately $4 million of amortization of purchased intangibles and approximately $1 million of restructuring expense. These exclusions move the non-GAAP gross margin to 54.2% for the first quarter of 2024, which is flat to Q1 of 2023. Non-GAPSGNA dollar spend was slightly lower on a year-over-year basis, but as a percentage of sales, it was higher due to lower revenue in Q-124.

Roop Lakaraju: GAAP to non-GAAP results for the first quarter and cost of goods sold we have excluded approximately $4 million in amortization of purchased intangibles and approximately a $1 million.

Roop Lakaraju: Restructuring expenses. These exclusions moved the non-GAAP gross margin to 54, 2% for the first quarter of 2024, which is flat to Q1 of 2023.

Roop Lakaraju: non-GAAP SG&A dollar spend was slightly lower on a year over year basis, but as a percentage of sales was higher due to lower revenue from Q1 'twenty four specifically in the first quarter of 'twenty for SG&A as a percent was 34% versus 31, 3% in Q1 2023.

Roop Lakaraju: Specifically, in the first quarter of 24, SG&A as a percent was 34% versus 31.3% in Q1 of 2023. In SG&A, on a non-GAAP basis, we have excluded amortization of intangibles of approximately $1 million, approximately $2 million for an in vitro diagnostic registration fee in Europe for previously approved products, and approximately $4 million of restructuring-related expenses. Non-GAAP R&D as a percentage of sales in the first quarter of 2024 was 10.5% versus 10.4% in Q1 of 2023.

Roop Lakaraju: In SG&A on a non-GAAP basis, we have excluded amortization of intangibles of approximately $1 million approximately $2 billion Brent in vitro diagnostic registration fee in Europe for previously approved products and approximately $4 million of restructuring related expenses.

Roop Lakaraju: non-GAAP R&D as a percentage of sales in the first quarter of 2024 was 10, 5% versus 10, 4% in Q1 of 2023 in R&D on a non-GAAP basis, we have excluded approximately $2 million of restructuring expenses and a small acquisition expense the cumulative sum of.

Roop Lakaraju: In R&D, on a non-GAAP basis, we have excluded approximately $2 million of restructuring expenses and a small acquisition expense. The cumulative sum of these non-gap adjustments results in moving the quarterly operating margin from 7.3% on a gap basis to 9.7% on a non-gap basis, which compares to a non-GAAP operating margin of 12.4% in Q1 of 2023. We've also excluded certain items below the operating line, which is primarily related to the increase in value of the Sartorius equity securities and loan receivable holdings of $422 million. The non-GAAP effective tax rate for the first quarter of 2024 was 22.3% compared to 20.9% for the same period in 2023.

Roop Lakaraju: These non-GAAP adjustments result in moving the quarterly operating margin from seven 3% on a GAAP basis to nine 7% on a non-GAAP basis.

Roop Lakaraju: non-GAAP operating margin compares to non-GAAP operating margin of 12, 4% in Q1 2023.

Roop Lakaraju: We have also excluded certain items below the operating line, which is primarily related to the increase in value of the sartorius equity securities and loan receivable holdings of $422 million.

Roop Lakaraju: non-GAAP effective tax rate for the first quarter of 2024 was 22, 3% compared to 29% for the same period in 2023.

Roop Lakaraju: Right in 2024 was driven by geographical mix of earnings and change in valuation allowance related to our deferred tax assets.

Roop Lakaraju: Finally, non-GAAP net income for the first quarter of 2024 was $65 million or $2.29 diluted earnings per share compared to $99 million or a diluted earnings per share $3 34 in.

Roop Lakaraju: A higher rate in 2024 was driven by geographical mix of earnings and a change in valuation allowance related to our deferred tax. Finally, non-GAAP net income for the first quarter of 2024 was $65 million or $2.29 diluted earnings per share compared to $99 million or $3.34 diluted earnings per share in Q1 of 2023. Moving on to the balance sheet. Total cash and short-term investments at the end of Q1 2024 was $1,651,000,000, compared to $1,613,000,000 at the end of 2023. The change in cash and short-term investments from the fourth quarter of 2023 was primarily due to the change in working capital. Inventory of $783 million was essentially flat compared to $781 million in the prior quarter.

Roop Lakaraju: In Q1 of 2023 movie.

Roop Lakaraju: Moving onto the balance sheet.

Roop Lakaraju: Total cash and short term investments at the end of Q1, 2024 was $1 $651 million compared to $1.613 billion at the end of 2023.

Roop Lakaraju: The change in cash and short term investments from the fourth quarter of 2023 was primarily due to the change in working capital.

Roop Lakaraju: Inventory of $783 million was essentially flat compared to $781 million in the prior quarter.

Roop Lakaraju: For the first quarter of 2024, net cash generated from operating activities was $70 million, which compares to $98 million in Q1 of 2023. Net capital expenditures for the first quarter of 2024 were $40 million, and depreciation and amortization was $37 million. Adjusted Ibadah for the first quarter of 2024 was 109 million, or 17.8% of sales, and excluding the Sartorius dividend was 14.8%. The adjusted EBITDA for the first quarter of 2023 was $149 million, or 21.9% of sales, and excluding the sartorius dividend, 16.8%. During the first quarter, we purchased 14,250 shares of our stock for a total cost of approximately $5 million, or an average purchase price of approximately $330 per share.

Roop Lakaraju: For the first quarter of 2024 net cash generated from operating activities was $70 million, which compares to $98 million in Q1 of 2023 net capital expenditures for the first quarter of 2024 or $40 million and depreciation and amortization was $37 million.

Roop Lakaraju: Adjusted EBITDA for the first quarter of 2000 $24 million to $109 million or 17, 8% of sales and excluding the sartorius dividend.

Roop Lakaraju: It was 14, 8% the.

Roop Lakaraju: Adjusted EBITDA for the first quarter of 2023 was $149 million or 21, 9% of sales and excluding the sartorius dividend was 16, 8%.

Roop Lakaraju: During the first quarter, we purchased 14250 shares of our stock for a total cost of approximately $5 million or an average purchase price of approximately $330 per share.

Norman D. Schwartz: We continue to be opportunistic with our buyback program and still have approximately $275 million available for share repurchases under the current board-authorized program. Moving on to the non-GAP guidance, As referenced in Andy's commentary, we are seeing some encouraging signs in the life science and healthcare markets. However, we remain cautious on the magnitude and timing of the recovery for the life science group but are still anticipating improvement during the second half of the year.

Roop Lakaraju: We continue to be opportunistic with our buyback program and still have approximately $275 million available for share repurchases under the current board authorized program.

Norman D. Schwartz: Moving on to the non-GAAP guidance as referenced in Andy's commentary, we are seeing some encouraging signs in the life science end markets. However, we remain cautious on the magnitude and timing of the recovery for the life Science group, but are still anticipating improvement during the second half of the year, we continue to expect normalized growth.

Norman D. Schwartz: We continue to expect normalized growth for the clinical diagnostics group in 2024. Taken together, we are maintaining our full-year outlook with currency-neutral revenue growth projected to be between 1 and 2.5% and non-gap operating margin projected to be between 13.5%. I'll now hand the call back to Norman to make a few concluding remarks.

Norman: For the clinical diagnostics group in 2024.

Norman: Taken together, we are maintaining our full year outlook with currency neutral revenue growth to be between one and two 5% and non-GAAP operating margin projected to be between 13, and a half and 14%.

Norman: I'll now hand, the call back to normal to make a few concluding remarks.

Norman D. Schwartz: Thanks, Drew. You know, just to close it out, I'd like to reiterate that, in spite of all that's going on around us, our strategy and our focus for the future growth of the company are intact. In our clinical diagnostics business, you know, we have these leading market positions globally for our core platforms, and we continue to invest in supporting the growth and building a position in, for example, a new molecular diagnostics segment, through the development of PCR-1, an acquisition we made some time ago, and leveraging our droplet digital PCR platform into high-value niches in Life Science.

Norman: Thanks Sue.

Norman D. Schwartz: Just to close it out I would like to reiterate that in spite of all that's going on around us are our strategy and our focus for the future growth. The company has is intact.

Norman D. Schwartz: In our clinical diagnostics business, we have these leading market positions globally for our core platforms and we continue to invest in supporting their growth and building a position in for example, our new molecular diagnostic segments.

Norman D. Schwartz: The development of PCR one.

Norman D. Schwartz: An acquisition, we made some time ago and leveraging our traffic with digital PCR platform into high value niches.

Norman D. Schwartz: In life Science.

Norman D. Schwartz: We continue to maintain a focus on biopharma, especially for digital PCR, our process chromatography products, and new products in development, particularly around cell biology. We do believe the long-term opportunity for sustained growth in this biopharma market segment is solid. And certainly, we also continue to invest to enhance our leadership in digital PCR and other leading platform positions in the academic markets that we serve. Overall, between life science and diagnostics, we do believe we're well positioned to drive long-term growth as we move through this dynamic period.

Norman D. Schwartz: We continue to maintain a focus on biopharma, especially for digital Pcr.

Norman D. Schwartz: As chromatography products and new products in development, particularly around cell biology.

Norman D. Schwartz: Yeah.

Norman D. Schwartz: We do believe the long term opportunity for sustained growth in this biopharma market segment is solid.

Norman D. Schwartz: And certainly we also continue to invest to enhance our leadership in digital PCR and other leading platform positions in in the academic markets that we serve.

Norman D. Schwartz: Overall between life Science and diagnostics, we do believe we are well positioned to drive long term growth.

Norman D. Schwartz: As we move through this dynamic period.

Operator: All right, that concludes our prepared remarks, and we will now open the line to take your questions, operator. Thank you, gentlemen.

Speaker Change: All right that concludes our prepared remarks, and we will now open the line to take your questions.

Operator: Operator.

Operator: Thank you, gentlemen. Ladies and gentlemen, at this time, if you would like to ask a question, please press the star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We go first this afternoon to Patrick Donnelly of Citi.

Speaker Change: Thank you gentlemen, ladies and gentlemen at this time, if you would like to ask a question. Please press the star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question. We go first this afternoon to Patrick Donnelly of Citi.

Patrick Donnelly: Hey, guys, thanks for taking the questions. Let me start with the life science business. I came in a little bit, a little bit light on what we were looking for. Can you talk about process chrome? It seems like that's an area you're calling out with a little bit of softness. Can you talk about what you saw in the quarter? And then, obviously, maintain the full year guide? Can you talk about the expectations for the life science business as we work our way through the year here and the growth expectations for the year at that time?

Patrick Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Donnelly: Let me start on the life science business that came in a little bit a little bit light of what we were looking for can you talk about it seems like process chroma scenario, you're calling out a little bit of softness can you talk about what you saw in the quarter and then obviously you're maintaining the full year guide can you talk about the expectations for the life Science business.

Patrick Donnelly: As we work our way through the year here.

Patrick Donnelly: Growth expectations for the Europe segment.

Andrew J. Last: Hi Patrick, Sandy. So let me take that question. So first on process chromatography in the quarter. You know, I mean, a tough compare to 2023 for sure.

Speaker Change: Hi, Patrick Sandy.

Speaker Change: Take that question so first on process chromatography in the quarter.

Speaker Change: I mean, it's a tough compare to 2023 for sure I think the core life science business kind of really met expectations. So we did call out that I think for US process chromatography is softer than we anticipated and that kind of drunk driving.

Andrew J. Last: I think the core life science business kind of really met expectations. So, you know, we did call that out. I think for us, our process chromatography is softer than we anticipated. And that kind of drove the delta for us. As we look forward to the rest of the year, at this point in time, we're considering that the process of Chrome is going to be softer than originally anticipated.

Andrew J. Last: Delta for us.

Andrew J. Last: As we look forward.

Andrew J. Last: To the rest of the year.

Andrew J. Last: At this point in time, we have.

Andrew J. Last: We're considering the process crime is going to be softer than originally anticipated.

Andrew J. Last: I just want to reiterate, because it's a valid question, you know, we're not seeing that we're losing customers. We're maintaining share. In fact, we still believe we are winning share, as we called out in the script.

Speaker Change: I just want to reiterate because it is a valid question.

Andrew J. Last: You know, we're not we're not seeing that we're losing customers. We're maintaining share in fact, we still believe we are winning share.

Andrew J. Last: As we called out in the script.

Andrew J. Last: On life science, it's just a higher level of uncertainty, I think, is where we sit right now. And most of the, if not virtually all of the delts are in life sciences instruments. The consumables and reagents are actually performing pretty consistently, sequentially, and year over year. So it's this kind of, it's the spend on capital spend on equipment, which is the major.

Andrew J. Last: On life Science, it's just a higher level of uncertainty I think is where we sit right now.

Andrew J. Last: And most of the if not virtually all of the Delta in life Sciences instrument.

Andrew J. Last: The consumables and reagents.

Andrew J. Last: Actually performing pretty consistently.

Andrew J. Last: Sequentially and year over year. So so it's kind of it's the spend on capital.

Andrew J. Last: Capital spend on equipment, which is the major delta for us right now.

Patrick Donnelly: Okay, so I guess when you think about maintaining a guide for the year overall, you know, process chrome softened a bit. Are there offsets that came in better than you expected that now you're thinking a little bit higher growth for the year? I'm just trying to figure out the balance here. Yeah, and the visibility into IBM.

Andrew J. Last: Okay.

Andrew J. Last: When you think about maintaining the guide for the year overall process chrome softened a bit.

Patrick Donnelly: Are there offsets that came in better than you expected, but are now youre thinking a little bit higher growth for the year I'm just trying to figure out the balance here yes.

Patrick Donnelly: And the visibility of that.

Andrew J. Last: Yeah, so I think the core life sciences, with the caveats that I just mentioned, I think we're, you know, in line. There's some strength in clinical diagnostics that looks good to us right now, which kind of keeps us within our guide range overall.

Patrick Donnelly: Yes, so I think the core life Sciences.

Andrew J. Last: With the caveats that I just mentioned I think.

Andrew J. Last: It's in line.

Andrew J. Last: There's some strength in clinical diagnostics that looks good to us right now.

Andrew J. Last: Which kind of keeps us within our guide range overall.

Patrick Donnelly: Okay. And then maybe just on DDTCR, how did that perform in the quarter? How are you seeing the competitive landscape there? You know, how did things trend and what are your expectations for the year on that, Francois? Yeah. So interestingly, you know, relative to core life cycle,

Andrew J. Last: Okay.

Andrew J. Last: And then maybe just on BD PCR how did that perform in the quarter. How are you seeing the competitive landscape there.

Francois: How does it how did things trend expectations for the year on that front as well would be helpful. Yes, So interestingly relative to core life science, which was down mid teens.

Andrew J. Last: Yeah, interestingly, you know, relative to core life science, which was down mid-teens, the digital PCR franchise was down a single-digit percentage, and it was all concentrated in instruments. The consumable reagent pull-through was pretty good, you know, and as we look forward, we view the franchise recovering in line with market recovery as we go through the remaining quarters in the year. Competitively... We're not seeing any change in our win-loss ratio. And, of course, you know, our major competition is calling out some improvement in their year-over-year performance. It's not lost on us. But we just want to reiterate that, you know, they're in a segment which we have not yet entered, which we'll be entering, you know, later this year.

Andrew J. Last: Actual PCR franchise was down single digit.

Andrew J. Last: Percentage and it was all concentrated in instruments consumable reagent pull through was.

Andrew J. Last: Pretty good.

Andrew J. Last: And as we look forward.

Andrew J. Last: We view the franchise recovering in line with market recovery as we go because we go through the remaining quarters in the year.

Andrew J. Last: Competitively.

Andrew J. Last: We're not seeing any change to our win loss ratio.

Andrew J. Last: And of course, you know our major competition.

Andrew J. Last: Is calling out some improvement in the year over year performance.

Andrew J. Last: Lost on us, but we just want to reiterate that that's there in the segment, which we have not yet entered a wish.

Andrew J. Last: <unk> will be entering in a later this year.

Speaker Change: Okay. Thanks, guys.

Andrew J. Last: Okay.

Andrew J. Last: Okay.

Operator: Thank you. We go next to Dan Leonard of UBS.

Andrew J. Last: Thank you we'll go next now to Dan Leonard of UBS.

Operator: Great. This is Lu An for Dan.

Operator: Great.

Daniel Leonard: <unk>. Thank you for taking my questions I.

Operator: Thank you for taking my questions. I think the first question, why don't you touch a little bit on the life sciences as well? Can you share a little bit more color on the older trends and maybe also the funnel activities? I think you mentioned the biotech funding improvement. Have you seen any increased activity from your customers? Yes.

Lu An: I think the first question wanted to touch a little bit onto lifestyle, such a small light can you share a little bit more color into order trends and maybe also the from the Philippines. I think you mentioned like a ballpark something improvements have you seen any increasing activities.

Operator: And from your customers.

Andrew J. Last: Yeah, so thank you for the question, Sandy, again. So I think where we sit right now, really encouraged by the influx of capital into biotech and biopharma, you know, that really is a prerequisite for Second Artefacts, you know, growth. It's not shown up in our order books as yet. You know, and the final is, you know, we're starting to have more positive sentiment and conversations within that segment. But it's not it's not shown up yet as, you know, you know, hard and fast order.

Speaker Change: Yes. Thank you for the question Sandy again.

Andrew J. Last: So I think we're.

Andrew J. Last: We sit right now really encouraged by the influx of capital into biotech Biopharma.

Andrew J. Last: That really is a prerequisite to second opex growth.

Andrew J. Last: Not showed up in our order books as yet.

Andrew J. Last: And the final is we're starting to have more positive sentiment in conversations.

Andrew J. Last: Within that segment.

Andrew J. Last: But it's not it's not showed up yet.

Andrew J. Last: No hard and fast orders.

Operator: Got it, appreciate it. So I guess I probably wanted to touch on a little bit on the guidance as well. So it does look that the second half ramp is a lot steeper, both in revenue and margin. And then also, you just mentioned you haven't seen anything in the orders yet. So can you just maybe share a little bit in terms of the visibility and your confidence in maintaining the guide? And then also, maybe how we should think about Q2 as well? Do you see improving signals in April? So it could help you to see the sequential improvement.

Speaker Change: Got it I appreciate that.

Andrew J. Last: So I guess I, probably have wanted to touch on a little bit on the guidance is small so it does look at the second half.

Operator: Thats a lot steeper.

Operator: Both revenue and margin and then also you gentlemen, Shang you havent seen anything orders yet so can.

Operator: Can you just maybe share a little bit and comes with low visibility and your confidence in maintaining that guy.

Operator: And then also maybe how we should think about Q2 was small.

Operator: Do you see improvement improving signals in April so.

Operator: You like to see the sequential improvement.

Andrew J. Last: Yeah, I think I'd kind of answer that question as a carry-on from my previous answer as it relates to biotech and biopharma, and you know, I do think that we need to see the kind of encouraging signs turn into orders for the second half, which obviously will generate the ramp. Process chromatography we do view as being, you know, really a more challenging year overall due to de-stocking, but we see some, you know, good growth in our clinical diagnostics business, and, you know, we envisage that continuing throughout the year. So I think it's really just, you know, a re-confirmation of the comments that we made in the script and my earlier answer.

Operator: Yeah, I think I think I'd kind of answer that question as a carry on from my previous answer as it relates to biotech biopharma.

Andrew J. Last: And.

Andrew J. Last: I do think that we need to we need to see the kind of encouraging signs turn into orders for the second half, which obviously will generate the ramp.

Andrew J. Last: The process chromatography, we do view as being.

Andrew J. Last: Really have come more challenging year overall due to destocking.

Andrew J. Last: But we see some good growth in our clinical diagnostics business and.

Andrew J. Last: And are we envisage that continuing throughout the year. So I think really just.

Andrew J. Last: Our reconfirmation of the comments that we made in the script in my earlier answer.

Operator: Got it. Just final questions on the post-margin. It does come better than what we expected given the lower volume. Can you share a little bit about the drivers of that, and then what's your expectation for the full year?

Speaker Change: Got it just final questions on the call with Martin It does come.

Operator: Better than what we expected given the lower volumes can you share a little bit the drivers start and then what's your expectation for the full year.

Roop Lakaraju: Yeah, hi, this is Rup. I'll take this to start. First of all, it did come in a little bit stronger, which we were very happy about, and part of that was expected just based on the cost actions we've taken and these sort of things. But also, what played a part was the mix, and so that helps support a little bit of a stronger gross margin there. I think as we think about the rest of the year, and as Andy pointed out, we feel good about the overall view for the full year on the gross margin.

Operator: Yeah, hi, this is Rupert. I'll take this.

Roop Lakaraju: Yes, Hi, this is roop I'll I'll take this to start first of all it did come in a little bit stronger, which we were very happy about.

Operator: And part of it was expected just based on the cost actions, we've taken and the sort of things, but also what played a part is the mix.

Operator: And so that helps support a little bit of a stronger gross margin. There I think as we think about the rest of the year and as Andy pointed out.

Operator: We feel good about the overall view for the full year on the gross margin based on mix and quarter to quarter move.

Roop Lakaraju: Based on mix and quarter-to-quarter movement, we may see a slight movement in that gross margin, but overall for the full year, we still feel very confident as it relates to how it fits in with our overall outlook for the year.

Roop Lakaraju: Movement, we may see a slight movement in that gross margin, but overall for the full year, we still feel very confident.

Roop Lakaraju: As it relates to how it fits in with our overall outlook for the year.

Speaker Change: Alright, thank you.

Operator: Thank you. We'll go next to Jack Meehan with Nefron Research.

Roop Lakaraju: Thank you we'll go next to Jack Meehan with Nephron research.

Operator: Thank you. Good afternoon. My first question is for Norman. I was just wondering if you could give a little bit more color on when we should expect updates in terms of the management hires for the new COO and also the plan for. Yeah, I think

Jack Meehan: Thank you good afternoon.

Jack Meehan: First question is for Norman.

Operator: Just wondering if you could give a little bit more color on when.

Jack Meehan: When we should expect updates in terms of the management hires for the new CLO and also the plan for the new head of diagnostics.

Norman D. Schwartz: Yeah, I think we're getting pretty close to the diagnostics hire. I think we'll have something to announce pretty soon. And, you know, we've got a really good pool of candidates on the COO side. That'll probably take a little longer, but we're pretty encouraged.

Operator: Yeah, I think we're getting pretty close on the on the diagnostics.

Norman D. Schwartz: Higher I think we'll have something to announce pretty soon and.

Norman D. Schwartz: We've got a really good pool of candidates on the.

Norman D. Schwartz: On the CLO side, that'll that'll probably take a little longer but.

Norman D. Schwartz: We're pretty encouraged.

Operator: Great. And then, for Ruth, first, welcome to Bio Rad. I had a couple of questions for you. The first is, you know, like, as you're new to the seat, how you went about sizing up the guidance for 2024. And second, is if you just talk about the cadence you're expecting for margins, you know, starting from 9.7 to get to the full year target. You know, how you feel in those phases throughout the year and how you gain confidence. Thanks, sure. [inaudible]

Norman D. Schwartz: Great and then for Ruth first welcome to bio Rad and had a couple of questions for you. The first is.

Operator: Can you just talk about like as you're new in the seat. How you went about sizing up the guidance for 2024 and second is if you could just talk about the cadence you're expecting for margin starting from $9 seven to get to the full year target.

Speaker Change: How do you feel like that.

Operator: Throughout the year and how you got confidence.

Operator: Thanks.

Operator: Sure.

Roop Lakaraju: Sure. So, first of all, thank you for the welcome.

Ruth: So first of all thank you for the welcome.

Roop Lakaraju: In terms of the process for the guidance, first of all, the company has an existing process, a business review cadence that was already in existence. And so part of this was really for me to seamlessly integrate into the existing processes. As part of those processes, we start out by looking at revenue on a quarterly basis with our sales teams and walking through revenue drivers and market conditions and these sort of things, and then profiling that against what we were expecting and understanding how mix might affect the next piece, which is margins and these sort of things.

Ruth: And in terms of the process on the guidance first of all the company has an existing process business review cadence.

Roop Lakaraju: There's also a number of cost actions that have been taken historically that we have also been monitoring the impact of those cost actions as well as kind of market dynamics around materials, pricing, logistics, trends, these sort of things and how that might affect the margin process. So we then just kind of walk down through the different areas of the P&L. When we got to the OpEx, it really is more around a run rate, the effect of things like merit, and how that plays out.

Roop Lakaraju: That was already in existence and so part of this was really for me too.

Roop Lakaraju: Seamlessly integrate into the existing processes as part of those processes, we start out with looking at revenue.

Roop Lakaraju: So we walk through that analytically and then get down, obviously, to the operating income. So based on the different drivers and our expectations and feedback from our sales team on how the ramp might look, how then that might flow through the factory from an absorption standpoint, it gave us confidence in reiterating our guidance overall. And that also, just to finish off the thought, I think, to your phasing question, that also gave us perspective on how to think about the quarter to quarter trend through the year. And if there's any kind of specific things that we need to call out or think about, you know, more specifically.

Roop Lakaraju: On a quarterly basis quarterly basis.

Operator: Thank you. We'll go next to Connor McNamara at RBC Capital Markets.

Roop Lakaraju: With our sales teams and walking through revenue drivers and market conditions in these sort of things.

Conor Noel McNamara: And then profiling that against what we were expecting and understanding how mix might affect the next piece, which is the margins in these sort of things. There's also a number of cost actions that have been taken historically that we were also man.

Operator: Monitoring the impact of those cost actions as well as.

Operator: Kind of market dynamics around materials pricing as logistics trends these sorts of things and how that might affect.

Conor Noel McNamara: The margin progress. So we then just kind of walk down through the different areas of the P&L.

Conor Noel McNamara: When we got to the Opex. It really is more around a run rate. The effect are things like merit and how that plays through so we walked through that analytically.

Operator: And then getting down obviously to the operating income so based on the different drivers and our expectations and feedback from our sales team on how the ramp might look how then that might flow through the factory from an absorption standpoint, it gave us confidence on reiterating our guidance overall.

Operator: That also just to finish off the thought I think to your phasing conversation question that also gave us perspective on how to think about that quarter to quarter trend through the year.

Conor Noel McNamara: And if there is any kind of specific things that we need to call out or think about.

Conor Noel McNamara: More specifically.

Operator: Okay.

Operator: Yes.

Operator: Anthony.

Conor Noel McNamara: Okay. Thank you. We'll go next now to Conor Mcnamara at RBC capital markets.

Operator: Hey, guys. Thanks for the questions. And I have just one for you. We appreciate the color on the management departures and how, you know, the timing was, a lot of it was personal, but can you give us more color on how other non-management employee retention has been? Has there been any fallout from some of these departures?

Conor Noel McNamara: Hey, guys. Thanks for the question.

Operator: Just one for you I appreciate the color on the management departures and how that the timing was.

Operator: First of all related but can you give us more color on how other nonmanagement employee retention has been has there been any fallout from some of these departures.

Norman D. Schwartz: No, there hasn't. I mean, obviously, in a company of our size and, you know, actually, any size, you have a certain amount of turnover that's natural every year in the, you know, in the kind of the 5 to 10 percent range. But, no, these departures have not precipitated anything else.

Speaker Change: No there Hasnt I mean, obviously in a company of our size.

Norman D. Schwartz: Actually any size you have a you have a certain amount of turnover.

Norman D. Schwartz: This naturally every year in that.

Norman D. Schwartz: And the kind of the 5% to 10% range, but.

Norman D. Schwartz: But no. These departures has not precipitated any anything else.

Norman D. Schwartz: Yeah.

Operator: Okay, thanks for that, and then... Just, you know, the color you gave on some of these DDPCR partnerships are some great announcements, but can you just kind of talk about some of the revenue opportunity for Bio Rad and, you know, do you see additional? Equipment placements, as a result of these, there's consumable pull-through. What's the kind of expected ramp-up of any sales benefit for some of those announced partnerships? Yeah, yeah.

Speaker Change: Okay. Thanks for that and then.

Operator: Yes.

Operator: The color you gave on some of these DD PCR partnerships are a great announcements, but can you just kind of.

Operator: Talk about some of the revenue opportunity for bio Rad and is that do you see additional.

Operator: Equipment placements as a result, <unk> consumable pull through what's kind of.

Operator: The expected ramp up of any.

Operator: Sales benefit for some of those.

Operator: Partnerships, yeah, yeah, Thanks comments as Andy so.

Andrew J. Last: Yeah, yeah, thanks Conor, this is Andy. So, there's a slightly different profile for each of these announcements. Allegheny is much more focused on real clinical insight around minimal residual disease and how best to deploy our technology to be more effective in that area. So that's really value creation through insight learning and clinical information. The Onca site is more tangible in that, you know, this is to generate longer-term... Systems placements and test sales for on-site, in particular, and then we'll have some beneficial effect from that. But you know that that's a kind of long-term strategy.

Andrew J. Last: Different profile for each of these announcements.

Andrew J. Last: Alleghany is much more focused on.

Andrew J. Last: Real clinical insight around.

Andrew J. Last: Minimal residual disease, and how best to deploy our technology too.

Andrew J. Last: Be more effective in that area.

Andrew J. Last: So that's really a value creation through wind site learning clinical clinical information.

Conor: Oh the Oncotype.

Andrew J. Last: It's more tangible and that.

Andrew J. Last: Is to generate longer term.

Andrew J. Last: Systems placements and and test sales for on site in particular, and then we will have some beneficial effect from that.

Andrew J. Last: It will have no material impact in the very near term. And then Genoscopy, we are the platform they chose to develop on, and as they succeed with that platform, moving forward, they'll create a consumable and reagent stream for us. And if there's an opportunity, which we believe there is, to take that solution beyond the U.S. and into other markets, that creates both test revenue and consumer and system revenue opportunities. None of this is what I would call an immediate near-term impact, but it's a really solid long-term strategy.

Andrew J. Last: But that's kind of a long term strategy.

Andrew J. Last: We'll have no material impact in the very near term.

Andrew J. Last: And then <unk>, where we are.

Andrew J. Last: The platform they chose to develop path.

Andrew J. Last: And.

Andrew J. Last: As they succeed and with that platform.

Andrew J. Last: Moving forward that will create a consumable and reagent stream for us.

Andrew J. Last: And if that's a opportunity, which we believe that is to take that solution beyond the U S and into other markets that creates both test revenue and.

Andrew J. Last: Consumables and system revenue opportunities. None of this is what I would call immediate near term impact, but its really solid long term strategy.

Operator: Great, thanks for that, Conor and Dan. I don't know if this is your last earnings call, but if so, best of luck in retirement. And Ruth, welcome to the team.

Speaker Change: Great. Thanks for that color and I don't.

Speaker Change: So if this is your last earnings call, but if so best of luck in retirement and welcome to the team. Thanks guys.

Operator: Just to be clear, this won't be Andy's last earnings call. We've made sure of that, and thank you. Well, thank you, Conor. Thank you. And just a reminder, ladies and gentlemen, to start

Speaker Change: Just to be clear won't be Andy's last earnings call. We've made sure of that.

Speaker Change: Okay, well thank you.

Operator: Thanks.

Operator: And just a reminder, ladies and gentlemen, please use star one, please, for any further questions today. And gentlemen, it appears we have no further questions this afternoon. Mr. Chung, I'd like to turn things back to you, sir, for any closing comments. Thank you.

Speaker Change: Thank you and just a reminder, ladies and gentlemen star one please for any further questions today.

Operator: And gentlemen, it appears we have no further questions. This afternoon, Mr. Cheung I would like to turn things back to you Sir for any closing comments.

Edward Chung: Yeah, thank you for joining today's call. We will be at the RBC Capital Markets Global Healthcare Conference in New York next week, and we'll be back in New York in June for the Jeffries Healthcare Conference. So, as always, we appreciate your interest, and we look forward to connecting soon.

Yong Chung: Yes. Thank you for joining today's call we will be at the RBC capital markets Global Healthcare Conference in New York next week, and we'll be back in New York in June for the Jefferies Healthcare Conference.

Edward Chung: As always we appreciate your interest and we look forward to connecting soon.

Edward Chung: Thanks.

Operator: Thank you, Mr. Chong. Ladies and gentlemen, we'll conclude the Bio Rad first quarter earnings results call. Again, thanks so much for joining us, and we wish you all a great remainder of your day.

Speaker Change: Thank you Mr. Jiang, ladies and gentlemen, we will conclude the bio Rad first quarter earnings results call again, thanks, so much for joining us and we wish you all a great remainder of your day Goodbye.

Operator: ["Pomp and Circumstance"] ["Pomp and Circumstance"]

Operator: [music].