Bio-Rad(US:BIO)2022-04-29 03:03Financial Data and Key Metrics Changes - Net sales for Q1 2022 were $700.1 million, a 3.7% decline from $726.8 million in Q1 2021, with a currency-neutral decrease of 0.8% [14] - Reported gross margin for Q1 2022 was 57.6%, up from 55.1% in Q1 2021, primarily due to a decline in expenses from a European restructuring initiative [23] - Reported net loss for Q1 2022 was $3.3696 billion, with a diluted loss per share of $112.57, compared to a net income of $977.4 million and $32.38 per share in Q1 2021 [28] Business Line Data and Key Metrics Changes - Life Science group sales were $347.2 million, a 5.3% decline on a reported basis, but a 12.9% increase in underlying currency-neutral core revenue growth when excluding COVID-related sales [18] - Clinical Diagnostics group sales were $351.8 million, a 1.9% decline on a reported basis, with a 1.7% increase in core revenue growth excluding COVID-related sales [21] Market Data and Key Metrics Changes - Currency-neutral year-over-year core revenue growth was experienced across all three regions, while COVID-related sales declined globally [16] - The Diagnostics group saw year-over-year currency-neutral sales growth in the Americas and Europe, but a decline in Asia [23] Company Strategy and Development Direction - The company anticipates a significant tapering in COVID-related sales compared to the last two years, with core revenue growth guidance for the full year set between 1% and 2%, or 8.5% to 9.5% when excluding COVID sales [36] - The Life Science group is expected to achieve core growth at the high end of the prior guidance, between 16% and 18% [37] Management's Comments on Operating Environment and Future Outlook - Management noted that while markets have recovered to near pre-pandemic levels, localized surges in COVID-19, particularly in China, have created uncertainty around logistics and near-term demand [9] - Supply chain challenges are expected to persist, particularly in securing raw materials and higher logistics costs, with easing anticipated in the second half of the year [12][17] Other Important Information - Total cash and short-term investments at the end of Q1 were $2.079 billion, significantly up from $875 million at the end of 2021, primarily due to proceeds from a $1.2 billion senior notes offering [33] - The adjusted EBITDA for Q1 2022 was $211.1 million, or 30.2% of sales, compared to $232 million, or 31.9% of sales in Q1 2021 [35] Q&A Session Summary Question: Insights on Life Science business performance - Management highlighted good performance from digital PCR and strong results from process media, leading to confidence in raising guidance for the Life Science business [41] Question: Margin expectations and tracking - Management discussed various factors affecting gross margin, including product mix and elevated logistics costs, while noting some discretionary expenses returning [43][44] Question: Diagnostics outlook and China lockdowns - Management indicated that the lower diagnostics outlook is largely tied to supply constraints, particularly in electronic components, affecting the ability to meet demand [52] Question: Capital allocation and share buybacks - Management expressed a continued opportunistic approach to share buybacks while balancing other capital allocation priorities [48] Question: Core growth expectations by segment - Management maintained guidance for full-year core growth, with expectations for Life Science to improve by midyear and Diagnostics to face challenges through the end of the year [61]