Bio-Rad(US:BIO)2021-07-29 16:00Part I Financial Statements The financial statements detail Bio-Rad's financial position, operations, and cash flows for the periods ended June 30, 2021, reflecting significant asset growth and strong sales performance Condensed Consolidated Balance Sheets The balance sheets show total assets increased to $15.12 billion by June 30, 2021, primarily due to a rise in other investments, alongside growth in liabilities and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $2,289,093 | $2,139,835 | | Other investments | $11,580,390 | $9,561,140 | | Total assets | $15,117,556 | $12,972,618 | | Total current liabilities | $587,052 | $631,536 | | Total liabilities | $3,522,676 | $3,092,678 | | Total stockholders' equity | $11,594,880 | $9,879,940 | Condensed Consolidated Statements of Income The income statements show net sales increased to $1.44 billion for the six months ended June 30, 2021, with net income reaching $1.89 billion, significantly influenced by equity security gains Key Income Statement Data (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $715,931 | $536,880 | $1,442,727 | $1,108,524 | | Gross profit | $401,598 | $292,988 | $802,225 | $610,356 | | Income from operations | $124,782 | $51,742 | $225,644 | $126,115 | | Change in fair market value of equity securities | $1,030,691 | $1,183,488 | $2,210,094 | $2,011,159 | | Net income | $914,114 | $966,429 | $1,891,528 | $1,652,341 | | Net income per diluted share | $30.32 | $32.15 | $62.70 | $54.84 | Condensed Consolidated Statements of Cash Flows Cash flow statements indicate net cash from operations significantly increased to $268.2 million for the six months ended June 30, 2021, with net cash used in investing and financing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $268,234 | $154,930 | | Net cash used in investing activities | ($148,604) | ($100,995) | | Net cash used in financing activities | ($44,482) | ($101,596) | | Net increase (decrease) in cash | $70,046 | ($50,519) | Notes to Condensed Consolidated Financial Statements The notes provide detailed accounting policies and disclosures, including revenue by region, the significant Sartorius AG investment, segment performance, a European restructuring plan, and a subsequent legal settlement Revenue by Geographic Region (in millions) | Region | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Europe | $476.7 | $369.7 | | Asia | $341.0 | $240.4 | | United States | $546.0 | $434.9 | | Other | $79.0 | $63.5 | | Total net sales | $1,442.7 | $1,108.5 | - The company owns approximately 37% of the ordinary outstanding voting shares and 28% of the preference shares of Sartorius AG as of June 30, 2021. Changes in the fair market value of this investment resulted in gains of $2.21 billion for the first six months of 20215354 - In February 2021, the company initiated a restructuring plan impacting European operations, expected to be complete by the end of 2022. A liability of $61.6 million was recorded as of June 30, 2021101 - Subsequent to the quarter end, on July 26, 2021, Bio-Rad entered into a settlement and patent cross-license agreement with 10x Genomics, Inc., resolving all outstanding litigation. Bio-Rad will receive approximately $32 million in Q3 2021112 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results, highlighting a 30.1% increase in net sales for the first half of 2021, driven by strong segment performance, improved gross margins, and increased operating cash flow Results of Operations Net sales grew 30.1% to $1.44 billion for the first six months of 2021, driven by strong performance in both Life Science and Clinical Diagnostics segments, with consolidated gross margin improving to 55.6% Six Months 2021 vs 2020 Performance | Metric | H1 2021 | H1 2020 | Growth | Currency-Neutral Growth | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1.44B | $1.11B | 30.1% | 25.4% | | Life Science Sales | $700.7M | $479.2M | 46.2% | 41.1% | | Clinical Diagnostics Sales | $738.8M | $623.4M | 18.5% | 14.1% | - Consolidated gross margins for H1 2021 were 55.6%, up from 55.1% in H1 2020. Life Science margins increased due to favorable product mix, while Clinical Diagnostics margins decreased due to restructuring costs142 - Operating expenses (SG&A and R&D) increased in H1 2021, primarily due to the European restructuring plan, higher employee-related expenses, and strategic investments143144 Liquidity and Capital Resources The company maintains a strong liquidity position with $1.17 billion in cash and investments, supported by increased net cash from operations and an available $200.0 million credit facility - As of June 30, 2021, the company had $1.17 billion in cash, cash equivalents, and short-term investments153 - Net cash provided by operations for the first six months of 2021 was $268.2 million, a significant increase from $154.9 million in the same period of 2020156 - In Q1 2021, the company repurchased 89,506 shares for $50.0 million. As of June 30, 2021, $223.1 million remained available under the Share Repurchase Program160 Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to the company's quantitative and qualitative disclosures about market risk since December 31, 2020 - There have been no material changes in market risk disclosures during the six months ended June 30, 2021163 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report165 - No material changes to internal control over financial reporting were identified during the quarter ended June 30, 2021166 Part II Legal Proceedings The company is involved in various legal proceedings arising in the ordinary course of business, which are not expected to have a material adverse effect on its financial position or liquidity - The company is involved in various legal proceedings arising from the ordinary course of business, which are not expected to have a material adverse effect99167 Risk Factors The company identifies key business risks including the ongoing impact of the COVID-19 pandemic, international operations, intense competition, IT security threats, the Sartorius AG investment, ERP system implementation, and government regulations - The COVID-19 pandemic continues to pose risks, including supply chain challenges for raw materials (plastics, resins, electronics) and transportation, as well as potential decreases in demand for COVID-related products as the pandemic subsides172173 - The company's large holding in Sartorius AG materially impacts financial results and creates a risk of being deemed an 'investment company' under the Investment Company Act, which could limit access to capital markets193 - The multi-year implementation of a new global ERP system presents risks of significant delays, increased costs, and potential business disruptions affecting order processing and operations199 - The company is subject to substantial and evolving government regulations globally (FDA, European IVDR, etc.), which could increase costs, delay product approvals, and impact market access210212213 - A significant majority of voting stock is held by the Schwartz family, allowing them to elect a majority of directors and control matters affecting the company, which could lead to conflicts of interest243 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock during the second quarter of 2021, with $223.1 million remaining authorized under the Share Repurchase Program as of June 30, 2021 - No shares were repurchased during the three months ended June 30, 2021249251 - As of June 30, 2021, $223.1 million remained available for repurchase under the company's Share Repurchase Program248251 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Filed exhibits include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL data files253254