Q1 2024 Bio-Rad Laboratories Inc Earnings Call
Hello.
Yeah.
Please standby were about to begin.
Speaker Change: 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.
Speaker Change: You May register to ask a question at any time by pressing star one on your telephone keypad.
Speaker Change: You May also withdraw yourself from the queue at any time by pressing star two.
Speaker Change: 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 Chang: Thanks, Bob.
Edward Chang: Afternoon, everyone and thank you for joining us.
Edward Chang: 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.
Edward Chang: And route lock Rajiv Executive Vice President and Chief Financial Officer.
Edward Chang: Before we begin our review I would like to remind everyone that we are banking 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 Chang: 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 Chang: Finally, our remarks today will include references to non-GAAP financials, including net.
Edward Chang: Income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles.
Edward Chang: You should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release.
Edward Chang: I'll now turn the call over to our CEO Norman Schwartz.
Norman D. Schwartz: Thanks, Ed.
Edward Chang: 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.
Speaker Change: Group has now been on board about four weeks.
CFO: And already contributing in fact, a roof will walk you through our financial results for the first quarter and that in a few minutes.
Speaker Change: But just I just want to say a few words that you know we have received questions about about management turnover in succession in the last six months.
CFO: I thought it'd be useful to say a few words.
CFO:
CFO: So in short you know as I think about it you know each of these discrete departures.
CFO: Really centered around personal decisions.
CFO: Either related to other opportunities or.
CFO: Or retirement.
CFO:
Speaker Change: From my perspective, it's it's all part of our normal progression for these individuals and adds to the company.
Speaker Change: 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.
Speaker Change: So as we move forward, we are making good progress filling some of these open positions.
Speaker Change: Some physicians are being filled it with external candidates like roof, which gives the company an opportunity to bring in fresh outside experience and perspective, and others are being filled with internal candidates like Jim Barry who we've recently announced as our new head of life Science.
Speaker Change: Jim brings a deep understanding of the company.
Speaker Change: Along with significant expertise in a variety of areas.
Speaker Change: So as I think about it today with with real upon board and the finance team is fully staffed.
Speaker Change: And.
CFO: And we're close to an announcement.
CFO: I'm the new head of diagnostics. In addition, we have good initial candidate pool for the CLO position.
Speaker Change: Yeah, I do view these changes as opportunities to bring fresh insights and ideas to the table as we continue our transformation journey.
CFO: So with that maybe I'll turn the call over to Andy to provide an update on.
Andy: Bio Rad is global operation Sandy.
Andy: Okay. Thank you gentlemen, and good afternoon, everybody. Thank you for joining us.
Andy: For the first quarter of 2024 reflected a continuation of the same macroeconomic and market trends, we had experienced in 2023.
Andy: In the biotech and Biopharma segments, as well as China and Russia.
CFO: As a result, our life Science group was in line with expectations and presented a soft quarters sales were the year over year decline, which also reflected a tough comparison from Q1 of 'twenty three.
CFO: 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.
CFO: Our life science business experienced double digit declines both across our core and biased by a processing product families.
CFO: As previously communicated our process chromatography sales, which have quarter to quarter Lumpiness went down significantly against the tough compare in Q1 2023.
CFO: This reflects the general destocking trend across the industry and for US as a result of a few large customers still working through excess inventory.
CFO: While we have seen indications as some customers starting to forecast purchase improvements.
CFO: Overall, we are expecting a further decline for process chromatography celsis yeah.
CFO: However, we have converted some early customers from competing residents to our platform during the first quarter and have not lost any customers as such we remain positive on the long term growth potential for this business.
CFO: 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.
CFO: Notably declines were concentrated in instrument sales, whereas consumable and reagent sales were essentially flat both sequentially and year over year.
CFO: 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.
CFO: And of course secure ex continuum later in the year all of which are contemplated in our outlook for the year.
CFO: Our digital droplet digital PCR franchise was soft in Q1 again with a tough Q1 2023 compare.
CFO: But the decline with single digit compared to our overall core life science sales.
CFO: 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.
CFO: The first with Allegheny Health network.
CFO: He is focused on generating clinical evidence across a range of cancer types using bio rads droplet digital PCR technology for tumor informed minimal residual disease monitoring of patients with solid tumor cancer following treatment.
CFO: 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.
CFO: Really rely on centralized next generation sequencing test providers.
CFO: 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.
CFO: We are very excited by the initial response, we have seen for this assay.
CFO: We're also pleased to see a key partner GNL skippy announcing FDA approval of countless sense, the new noninvasive RNA based colorectal cancer screening test that runs on our digital PCR platform.
CFO: Moving onto our clinical diagnostics business.
CFO: 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.
CFO: 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.
CFO: Reflecting on the first quarter's macroeconomic and market conditions, they broadly matched our expectations.
CFO: We were pleased to see the positive trend for capsule raise is flowing into the biotech and biopharma markets.
CFO: 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.
CFO: China remains soft for the life science business, although the Chinese government stimulus announcement was encouraging for the longer term recovery of the market.
CFO: We also continue to navigate the sanctions imposed on Russia, where we maintain supply of some critical clinical diagnostic products.
CFO: In the U S. Finalization of the NIH budget was delayed until late March and at a slightly lower level than anticipated.
CFO: 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.
CFO: 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.
CFO: We continue to expect normalized drugs for our clinical diagnostics business in 2024.
Speaker Change: And with that I'll say, thank you and I'll now pass you to route to review the financial results.
Route: Thank you Andy.
Route: And now like to review the results for the first quarter.
Route: Net sales for the first quarter of 2024 $611 million, which is a nine 8% decline on a reported basis versus $677 million in Q1 of 2023.
Route: On a currency neutral basis, the year over year revenue decline was nine 6% it's.
Route: 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 in clinical diagnostics group.
Route: Sales of the life Science group in the first quarter of 2024 with $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.
Route: Decline impacted most product and geographic areas.
Route: Excluding process chromatography sales, which can fluctuate quarter to quarter life Science group revenue decreased 16, 6% on a currency neutral basis.
Route: Sales of the clinical diagnostics group in the first quarter were 369 billion 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.
Route: Gross up the clinical diagnostics group was primarily driven by increased demand for quality controls blood typing and diabetes.
Route: The geographic basis currency neutral year over year revenue for the diagnostics group posted balanced growth across all three regions.
Route: But 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.
Route: And lower absorption.
Route: Amortization related to prior acquisitions recorded in cost of goods sold was approximately $4 million in both periods.
Route: SG&A expenses for Q1, 2024 were $215 million or 35, 2% of sales compared to $226 million or 33% in Q1 of 2023.
Route: 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.
Route: Total amortization expense related to acquisitions recorded in SG&A for the quarter, it's approximately a million dollars for versus approximately $2 million in Q1 of 2023.
Route: 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.
Route: Year over year decrease was primarily due to decreased employee related expenses and lower restructuring costs.
Route: 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.
Route: Looking below the operating line the change in fair market value of equity security holdings, which are substantially related to buyer adds ownership or sartorius AG shares added $422 million of income to the reported results.
Route: 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.
Route: 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.
Route: Active tax rate for the first quarter of 2024 was 21, 8% compared to 18, 7% for the same period in 2023.
Route: The effective tax rate reported in these periods was primarily affected by the accounting treatment of our equity securities.
Route: 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.
Route: In Q1 of 2023.
Route: This change from last year is largely related to changes in the valuation of our Sartorius holdings.
Route: 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 looking.
Route: GAAP to non-GAAP results for the first quarter and cost of goods sold we have excluded approximately $4 million of amortization of purchased intangibles and approximately $1 million.
Route: Restructuring expense. These exclusions moved the non-GAAP gross margin to 54, 2% for the first quarter of 'twenty 'twenty, four which is flat to Q1 of 2023.
Route: 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 in Q1, 'twenty four specifically in the first quarter of 'twenty for SG&A as a percent was 34% versus 31, 3% in Q1 of 2023.
Route: In SG&A on a non-GAAP basis, we have excluded amortization of intangibles of approximately a million dollars approximately $2 billion for Brent in vitro diagnostic registration fee in Europe for previously approved products and approximately $4 million of restructuring related expenses.
Route: 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 it.
Route: 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.
Route: non-GAAP operating margin compares to non-GAAP operating margin of 12, 4% in Q1 of 2023.
Route: 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.
Route: The non-GAAP effective tax rate for the first quarter of 2024 was 22, 3% compared to 29% for the same period in 2023.
Route: Right in 2024 was driven by geographical mix of earnings and change in valuation allowance related to our deferred tax assets.
Route: 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 Q1 of 2023.
Route: Moving on to the balance sheet total cash and short term investments at the end of Q1, 2024 was $1.651 billion compared to $1.613 billion at the end of 2023 the.
Route: The change in cash and short term investments for from the fourth quarter of 2023 was primarily due to the change in working capital.
Route: Inventory of $783 million was essentially flat compared to $781 million in the prior quarter.
Route: 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.
Route: Adjusted EBITDA for the first quarter of 2024 to 109 billion or 17, 8% of sales and excluding the sartorius dividend.
Route: It was 14, 8% the.
Route: The adjusted EBITDA for the first quarter of 2023 was $149 million or 21, 9% of sales and excluding the sartorius dividend was 16, 8%.
Route: 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.
Route: 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.
Route: 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.
Route: For the clinical diagnostics group in 2024.
Route: 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 2014%.
Route: I'll now hand, the call back to normal to make a few concluding remarks.
Route: Hi.
Norm: 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 of company as he is intact.
Normal: 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.
Normal: The development of PCR one.
Route: An acquisition, we made some time ago and leveraging our traffic digital PCR platform into high value niches.
Route: In life Science.
Route: We continue to maintain a focus on biopharma, especially with digital Pcr.
Route: As chromatography products and new products in development say, particularly around cell biology.
Route: We do believe that long term opportunity for sustained growth in this biopharma market segment is is solid.
Route: 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.
Route: Overall between life Science and diagnostics, we do believe we are well positioned to drive long term growth.
Route: As we move through this dynamic period.
Speaker Change: All right that concludes our prepared remarks, and we will now open the lines to take your questions.
Route: Operator.
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 maybe.
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.
Patrick Donnelly: Can you talk about it seems like process problems, an area, 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 your full year guide can you talk about the expectations for the life science business as we work our way through the year here.
Patrick Donnelly: Growth expectations for the year.
Speaker Change: Hi, Patrick Sandy.
Patrick Sandy: Let me take that question, so first on process chromatography and in the quarter.
Patrick Sandy: You know 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.
Patrick Sandy: Did call out that I think for us our process chromatography is softer than we anticipated and that kind of drugs drove the delta for us.
Patrick Sandy: As we look forward to the rest of the year at.
Patrick Sandy: At this point in time, we have with we're considering the process crime is gonna be softer than than originally anticipated.
Speaker Change: I just want to reiterate because it is a valid question.
Speaker Change: 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.
Speaker Change: As we called out in the script.
Speaker Change: On life Science. It is just a higher level of uncertainty I think is where we sit right now.
Speaker Change: And most of the if not virtually all of the Delta in life Sciences instrument.
Speaker Change: The consumables and reagents.
Speaker Change: Actually performed pretty consistently.
Speaker Change: Sequentially and year over year. So so it's kind of it's the spend on capital.
Speaker Change: Capital spend on equipment, which is the major delta for us right now.
Speaker Change: Okay.
Speaker Change: When you think about maintaining the guide for the year overall profits chrome softened a bit.
Speaker Change: 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, yeah I mean.
Speaker Change: And the visibility of that.
Speaker Change: Yeah, So I think the core life Sciences.
Speaker Change: With the caveats that I just mentioned I think you know it.
Speaker Change: In line.
Speaker Change: There's some strength in clinical diagnostics that looks good to us right now, which kind of keeps us within our guide range of ROE.
Speaker Change: Okay.
Speaker Change: And then maybe just on BD PCR how did that perform in the quarter. How are you seeing the competitive landscape there.
Speaker Change: How does it how did things trend expectations for the year on that front as well would be helpful. Yeah. So interestingly you know relative to core life science, which was down mid teens are the digital PCR franchise was down single digit.
Speaker Change: Percentage and it was all concentrated in instruments.
Speaker Change: Consumable reagent pull through was.
Speaker Change: Pretty good.
Speaker Change: You know and as we look forward.
Speaker Change: We view the franchise recovering in line with the market recovery as we go because we go through the remaining quarters and yeah.
Speaker Change: Competitively.
Speaker Change: We're not seeing any change to our and our win loss ratio.
Speaker Change: And of course, you know our major competition.
Speaker Change: Is calling out some improvement in their year over year performance.
Speaker Change: Just on us, but we just want to reiterate that that's you know they're in a segment, which we have not yet entered.
Speaker Change: Which we will be entering in a later this year.
Speaker Change: Okay. Thanks, guys.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Thank you well go next now to Dan Leonard of UBS.
Speaker Change: Great.
Daniel Louis Leonard: And to answer Dan. Thank you for taking my questions I.
Daniel Louis Leonard: I think the first question I 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 frontal Attila piece I think you mentioned.
Daniel Louis Leonard: Something improvement have you seen any increasing activities.
Daniel Louis Leonard: And from your customers.
Daniel Louis Leonard: Yeah. So thank you for the question, it's Andy again.
Andy: So I think where we sit right now are really encouraged by the influx of capital into biotech by pharma you know at that that really is a prerequisite to second opex and our growth.
Daniel Louis Leonard: It's not shut up in our books as yet.
Daniel Louis Leonard: <unk>.
Andy: And the final is we're starting to have more positive sentiment in conversations.
Andy: Within that segment.
Andy: But it's not it's not showed up yet.
Andy: No hard and fast orders.
Speaker Change: Got it I appreciate that.
Speaker Change: So I guess I, probably have wanted to touch on a little bit on the guidance is small so it does look that the second half.
Speaker Change: Ron that's a lot steeper.
Speaker Change: The revenue and margin and then also you just mentioned you haven't seen anything orders yet so.
Speaker Change: Can you just maybe share a little bit and it comes from the visibility and your confidence in maintaining sky.
Speaker Change: Then also maybe how we should think about Q2 was small.
Speaker Change: Do you see improvement improving signals from April so.
Speaker Change: Could help you like to see the sequential improvement.
Speaker Change: 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 by pharma.
Speaker Change: And you.
Speaker Change: 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 would generate the ramp.
Speaker Change: <unk> chromatography, we do view as being.
Speaker Change: Really have come more challenging year over all due to destocking.
Speaker Change: But we see some good growth in our clinical diagnostics business and.
Speaker Change: We envisage that continuing throughout the year, So I think it really just.
Speaker Change: Our reconfirmation of the comments that we made in the script and in my earlier earlier answer.
Speaker Change: Got it just final question on the Cogs Martin It does come.
Speaker Change: Better than what we expected given the lower volume can.
Speaker Change: Can you share a little bit the drivers start and then what's your expectation for the full year.
Roop: Yes, Hi, this is roop I'll I'll take this to start.
Roop: First of all it did come in a little bit stronger, which we were very happy about.
Roop: And part of it was expected just based on the cost actions, we've taken in and these sort of things, but also what played a part is the mix.
Roop: 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.
Roop: We feel good about the overall view for the full year on the gross margin based on mix and quarter to quarter.
Roop: Movement, we may see a slight movement in that gross margin, but overall for the full year, we still feel very confident.
Roop: As it relates to how it fits in with our overall outlook for the year.
Speaker Change: Alright, thank you.
Roop: Thank you we'll go next to Jack Meehan with Nephron research.
Jack Meehan: Thank you good afternoon.
Jack Meehan: First question is for Norman.
Jack Meehan: Just wondering if you could give a little bit more color on.
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.
Jack Meehan: Yeah, I think we're getting pretty close on the AR on the diagnostics.
Jack Meehan: Higher I think we'll have something to announce pretty soon.
Jack Meehan: And you know.
Jack Meehan: We've got a really good pool of candidates on the AR on the CLO side that'll that'll probably take a little longer but.
Jack Meehan: We're pretty encouraged.
Speaker Change: Great and then for Ruth first a welcome to bio Rad and had a couple of questions for you. The first is <unk>.
Ruth: 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 do you get to the full year target.
Speaker Change: How do you feel like that.
Jack Meehan: Throughout the year and how you got confidence.
Jack Meehan: Sure.
Speaker Change: So first of all thank you for the welcome.
Speaker Change: In terms of the process on the guidance first of all the company has an existing process business review cadence that was already in existence and so part of this was really for me too.
Speaker Change: Seamlessly integrate into the existing processes as part of those processes, we start out with looking at revenue.
Speaker Change: On a quarterly basis quarterly basis.
Speaker Change: With our sales teams and walking through revenue drivers and market conditions in these sort of things.
Speaker Change: 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 monitoring the impact of those cost actions as well as.
Speaker Change: Kind of market dynamics around materials pricing logistics trends these sorts of things and how that might affect the.
Jack Meehan: The margin profile. So we then just kind of walk down through the different areas of the P&L.
Jack Meehan: 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.
Jack Meehan: And then getting down obviously, it's 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, you gave us confidence on reiterating our guidance overall.
Jack Meehan: 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.
Jack Meehan: And if there is any kind of specific things that we need to call out or think about.
Jack Meehan: Specifically.
Jack Meehan: Okay.
Jack Meehan: Yes.
Jack Meehan: Okay.
Jack Meehan: Okay.
Jack Meehan: Thank you. We'll go next now to Conor Mcnamara at RBC capital markets.
Conor Noel McNamara: Hey, guys.
Conor Noel McNamara: Thanks for the question.
Conor Noel McNamara: Just one for you I appreciate the color on the management departures.
Conor Noel McNamara: The timing was.
Conor Noel McNamara: A lot of those 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.
Speaker Change: I know there Hasnt I mean, obviously in a in a company of our size.
Speaker Change: Actually any size you have a you have a certain amount of turnover that this natural every year and that kind of 5% to 10% range, but.
Speaker Change: But no. These departures has not precipitated any anything else.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: The color you gave on some of these DD PCR partnerships are a great announcements, but can you just kind of.
Jack Meehan: Talk about some of the revenue opportunity for bio Rad and is that do you see additional.
Jack Meehan: Equipment placements as a result, <unk> consumable pull through what's kind of.
Jack Meehan: The expected ramp up of any.
Jack Meehan: Sales benefit for some of those.
Speaker Change: Partnerships, yeah, yeah, Thanks comments as Andy so.
Speaker Change: Different profile for each of these announcements.
Jack Meehan: Alleghany is much more focused on.
Jack Meehan: Real clinical insight around.
Jack Meehan: Minimal residual disease, and how best to deploy our technology to.
Jack Meehan: Be more effective in that area.
Jack Meehan: So that's really a value creation through wind site learning clinical and a clinical information.
Jack Meehan: Oh they oncotype.
Jack Meehan: It's more tangible and that you know this.
Jack Meehan: Is to generate longer term.
Jack Meehan: Systems placements and and test sales for on site in particular, and then we will have some beneficial effect from that.
Jack Meehan: But that's a kind of a long term strategy.
Jack Meehan: We'll have no material impact in the very near term.
Jack Meehan: And then <unk>, we are the platform they chose to develop on.
Jack Meehan: And you know as.
Jack Meehan: As they succeed and with that platform.
Jack Meehan: Moving forward that will create a consumable and reagent stream for us.
Jack Meehan: And if they say opportunity, which we believe that is to take that solution beyond the U S and into other markets that creates both test revenue and.
Jack Meehan: Consumables and system revenue opportunities. None of this is what I would call immediate near term impact, but its really solid long term strategy.
Speaker Change: Great. Thanks for that color and I don't know.
Speaker Change: This is your last earnings call, but if so best of luck in retirement and welcome to the team. Thanks guys.
Speaker Change: Just to be clear it won't be Andy's last earnings call. We've made sure of that okay.
Speaker Change: Okay, well, thank you Conor.
Speaker Change: Thanks.
Speaker Change: Thank you and just a reminder, ladies and gentlemen star one please for any further questions today.
Yong Chung: And gentlemen, it appears we have no further questions. This afternoon, Mr. Cheung I'd like to turn things back to you Sir for any closing comments.
Cheung: 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.
Yong Chung: As always we appreciate your interest and we look forward to connecting soon.
Yong Chung: Thanks.
Speaker Change: Thank you Mr. Zhang 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 Goodbye.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].