Part I – Financial Information Financial Statements Presents unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2021, including balance sheets, income, cash flows, and equity changes Condensed Consolidated Balance Sheets Total assets increased to $19.95 billion from $12.97 billion by September 30, 2021, driven by a rise in other investments and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $2,466,286 | $2,139,835 | | Other Investments | $16,230,635 | $9,561,140 | | Total Assets | $19,953,380 | $12,972,618 | | Total Current Liabilities | $649,916 | $631,536 | | Total Liabilities | $4,621,002 | $3,092,678 | | Total Stockholders' Equity | $15,332,378 | $9,879,940 | Condensed Consolidated Statements of Income Q3 2021 net sales grew 15.4% to $747.0 million, with net income surging to $3.93 billion due to equity security gains; nine-month net sales reached $2.19 billion Q3 2021 vs Q3 2020 Financial Performance (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net Sales | $747,049 | $647,263 | | Gross Profit | $437,435 | $367,311 | | Income from Operations | $156,804 | $109,600 | | Change in fair market value of equity securities | $4,868,659 | $1,580,350 | | Net Income | $3,928,033 | $1,314,824 | | Diluted EPS | $129.96 | $43.64 | Nine Months 2021 vs 2020 Financial Performance (in thousands, except per share data) | Metric | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | | Net Sales | $2,189,776 | $1,755,787 | | Gross Profit | $1,239,660 | $977,667 | | Income from Operations | $382,448 | $235,715 | | Change in fair market value of equity securities | $7,078,753 | $3,591,509 | | Net Income | $5,819,561 | $2,967,165 | | Diluted EPS | $192.76 | $98.46 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities for the nine months ended September 30, 2021, increased to $498.6 million, with a $197.4 million overall increase in cash and equivalents Nine Months Ended September 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $498,597 | $290,594 | | Net cash used in investing activities | ($229,954) | ($10,141) | | Net cash used in financing activities | ($60,064) | ($101,157) | | Net increase in cash, cash equivalents, and restricted cash | $197,405 | $182,450 | Notes to Condensed Consolidated Financial Statements Detailed notes cover accounting policies, a $31.6 million Q3 IP settlement, a $7.1 billion gain from Sartorius AG investment, a $58.0 million restructuring liability, and the $125 million acquisition of Dropworks, Inc - In Q3 2021, the company recognized $31.6 million in revenue from a settlement of an intellectual property litigation for infringing product sales from November 2018 through July 202130 - The fair market value of equity securities, primarily the investment in Sartorius AG, increased by $7.08 billion in the first nine months of 20215657 - A strategy-driven restructuring plan was announced in February 2021, primarily impacting European operations. As of September 30, 2021, the company has a restructuring liability of $58.0 million9899 - Subsequent to the quarter end, on October 15, 2021, Bio-Rad acquired Dropworks, Inc. for approximately $125 million to complement its Digital PCR product offerings110 Management's Discussion and Analysis (MD&A) MD&A highlights Q3 2021 sales growth of 15.4% and nine-month growth of 24.7%, driven by Life Science and Clinical Diagnostics segments, with strong liquidity and $498.6 million in operating cash flow Results of Operations Q3 2021 net sales increased 15.4% to $747.0 million, with gross margin improving to 58.6%; nine-month net sales grew 24.7% to $2.19 billion across segments Q3 2021 vs Q3 2020 Sales Growth | Segment | Q3 2021 Sales | Growth (Reported) | Growth (Currency-Neutral) | | :--- | :--- | :--- | :--- | | Life Science | $373.5M | 15.3% | 13.9% | | Clinical Diagnostics | $372.2M | 15.5% | 13.7% | | Total Net Sales | $747.0M | 15.4% | 13.8% | Nine Months 2021 vs 2020 Sales Growth | Segment | Nine Months 2021 Sales | Growth (Reported) | Growth (Currency-Neutral) | | :--- | :--- | :--- | :--- | | Life Science | $1.07B | 33.7% | 30.3% | | Clinical Diagnostics | $1.11B | 17.5% | 13.9% | | Total Net Sales | $2.19B | 24.7% | 21.2% | - Consolidated gross margin for Q3 2021 increased to 58.6% from 56.7% in Q3 2020, partly due to a one-time royalty revenue of $31.6 million which contributed 2.0 percentage points to the Life Science segment's gross margin126 Liquidity and Capital Resources The company maintains strong liquidity with $1.34 billion in cash and equivalents, $498.6 million in operating cash flow for nine months, and $223.1 million remaining for share repurchases - As of September 30, 2021, the company had $1.34 billion in cash, cash equivalents, and short-term investments151 - Net cash provided by operations for the nine months ended September 30, 2021, was $498.6 million, a significant increase from $290.6 million in the same period of 2020154 - The company repurchased $50.0 million of its Class A common stock in Q1 2021. As of September 30, 2021, $223.1 million remained available under the Share Repurchase Program158 Quantitative and Qualitative Disclosures about Market Risk No material changes to market risk disclosures were reported for the nine months ended September 30, 2021 - There were no material changes in market risk disclosures during the nine months ended September 30, 2021163 Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period165 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls166 Part II – Other Information Legal Proceedings The company is involved in ordinary course legal actions, but does not anticipate a material adverse effect on its financial position or results - The company does not expect any ongoing legal proceedings to have a material adverse effect on its financial results, position, or liquidity96167 Risk Factors Key risks include COVID-19 impacts, international operations (61% of net sales), competition, cyberattacks, currency fluctuations, and the material impact of Sartorius AG investment value changes - The COVID-19 pandemic continues to pose risks, affecting product demand, raw material supply, and transportation logistics170171173 - Significant international operations (61% of net sales) expose the company to complex foreign laws, currency fluctuations, and geopolitical risks like Brexit176177 - Changes in the market value of the company's investment in Sartorius AG materially impact financial results and could potentially cause the company to be deemed an 'investment company' under the Investment Company Act192193 - The company faces risks of information system breaches and cyberattacks, which could misappropriate confidential data and disrupt operations184 - The business is subject to risks from supply chain interruptions, particularly for components and raw materials sourced from a limited number of suppliers222223 Unregistered Sales of Equity Securities and Use of Proceeds As of September 30, 2021, $223.1 million remained available for share repurchases, with no shares purchased during Q3 2021 Share Repurchase Activity (Q3 2021) | Period | Total Shares Purchased | Average Price Paid | Remaining Authorization | | :--- | :--- | :--- | :--- | | July 2021 | 0 | N/A | $223.1M | | August 2021 | 0 | N/A | $223.1M | | September 2021 | 0 | N/A | $223.1M |
Bio-Rad(BIO_B) - 2021 Q3 - Quarterly Report