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Bio-Rad Reports Second-Quarter 2022 Financial Results

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HERCULES, Calif., July 28, 2022--(BUSINESS WIRE)--Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global leader in life science research and clinical diagnostic products, today announced financial results for the second quarter ended June 30, 2022.

Second-quarter 2022 net sales were $691.1 million, a decrease of 3.5 percent compared to $715.9 million reported for the second quarter of 2021. COVID-related revenue was approximately $33 million in the second quarter of 2022 versus approximately $69 million reported in the year-ago period. On a currency-neutral basis, quarterly sales increased 0.5 percent compared to the same period in 2021. Excluding COVID-related sales, revenue increased 5.7% on a currency-neutral basis.

Second-quarter gross margin was 57.3 percent compared to 56.1 percent for the second quarter of 2021.

Life Science segment net sales for the second quarter were $322.4 million, a decrease of 3.5 percent compared to the same period in 2021. On a currency-neutral basis, Life Science segment sales increased 0.5 percent compared to the same quarter in 2021. The currency-neutral sales increase was primarily due to increased sales of Process Chromatography and Protein Quantitation products.

Clinical Diagnostics segment net sales for the second quarter were $367.8 million, a decrease of 3.3 percent compared to the same period in 2021. On a currency-neutral basis, net sales were up 0.7 percent versus the same quarter last year. The currency-neutral sales increase was primarily driven by growth in the Quality Controls and the Immunohematology businesses.

Income from operations for the second quarter of 2022 was $120.2 million versus $124.8 million during the same quarter last year.

Net loss for the second quarter of 2022 was $927.2 million, or a loss of $31.12 per share, on a diluted basis, versus $914.1 million of net income, or $30.32 per share, on a diluted basis, during the same period in 2021. Net income (loss) amounts for the second quarter of 2022 and 2021 were primarily impacted by the recognition of changes in the fair market value of equity securities related to the holdings of the company’s investment in Sartorius AG.

The effective tax rate for the second quarter of 2022 was 24.2 percent, compared to 21 percent for the same period in 2021. The second-quarter 2022 effective tax rate was primarily affected by an unrealized loss in equity securities and the tax rate reported in Q2 of 2021 was primarily affected by an unrealized gain in equity securities.

"During the second quarter, we continued to see solid demand in our core Life Science and Clinical Diagnostics segments against the backdrop of the ongoing macroeconomic, geopolitical, and supply chain challenges," said Norman Schwartz, Bio-Rad’s President, and Chief Executive Officer. "Looking to the second half of the year, while we expect the supply chain constraints to continue, we remain on track to achieve our full-year 2022 financial outlook."

GAAP Results

Q2 2022

Q2 2021

Revenue (millions)

$691.1

$715.9

Gross margin

57.3%

56.1%

Operating margin

17.4%

17.4%

Net income (loss) (millions)

($927.2)

$914.1

Income (loss) per diluted share

($31.12)

$30.32

Non-GAAP Results

Q2 2022

Q2 2021

Revenue (millions)

$691.1

$715.9

Gross margin

57.9%

56.9%

Operating margin

18.8%

18.5%

Net income (millions)

$101.4

$106.6

Income per diluted share

$3.38

$3.54

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this press release. Non-GAAP adjustments include amortization of purchased intangibles; acquisition-related expenses and benefits; restructuring, impairment charges and gains and losses from change in fair market value of equity securities and loan receivable; gains and losses on equity-method investments; significant litigation charges or benefits and legal costs; and discrete income tax events and the income tax effect on these non-GAAP adjustments.

Non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS) are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Non-GAAP and Currency-Neutral Reporting."

Non-GAAP net income for the second quarter of 2022 was $101.4 million, or $3.38 per share, on a diluted basis, compared to $106.6 million, or $3.54 per share, on a diluted basis, during the same period in 2021.

The non-GAAP effective tax rate for the second quarter of 2022 was 19 percent, compared to 21.5 percent for the same period in 2021. The lower rate in 2022 was driven by the geographical mix of earnings, as well as the benefit of a preferential tax rate related to export sales.

The following table represents a reconciliation of Bio-Rad’s reported net income (loss) and diluted income (loss) per share to non-GAAP net income and non-GAAP diluted income per share for the three and six months ended June 30, 2022, and 2021:

(in thousands, except per share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

GAAP net income (loss)

($927,184)

$914,114

($4,296,797)

$1,891,528

Legal Settlements

-

-

-

(536)

Amortization of purchased intangibles

6,291

6,995

12,601

13,935

Legal matters

875

8,761

2,068

13,176

Acquisition related benefits

-

(40)

-

(40)

Restructuring benefits (costs)

(43)

(7,781)

1

67,784

(Gains) losses from change in fair market value of equity securities and loan receivable

1,338,190

(1,030,691)

5,883,307

(2,210,094)

Losses on equity-method investments

1,633

1,840

2,623

3,680

Other non-recurring items

1,161

-

3,970

-

Income tax effect on non-GAAP adjustments

(319,518)

213,387

(1,357,228)

484,523

Non-GAAP net income

$101,405

$106,585

$250,545

$263,956

GAAP diluted income (loss) per share

($31.12)

$30.32

($143.88)

$62.70

Non-GAAP diluted income per share

$3.38

$3.54

$8.32

$8.75

On a reported basis, net sales for the first half of 2022 decreased 3.6 percent to $1,391.2 million compared to $1,442.7 million for the same period in 2021. On a currency-neutral basis, net sales decreased 0.1 percent.

Year-to-date net loss for 2022 was $4,296.8 million, or $143.8 per share on a fully diluted basis, compared to net income of $1,891.5 million, or $62.70 per share, respectively, during the same period in 2021. On a non-GAAP basis, net income for the first two quarters of 2022 was $250.5 million, or $8.32 per share, compared to $264.0 million, or $8.75 per share, during the same period in 2021.

2022 Financial Outlook

For the full-year 2022, the company now anticipates non-GAAP currency-neutral revenue growth to be at the high end of the prior 1.0 to 2.0 percent guidance, with Covid-related revenue expected to be about $93 million versus approximately $70 million previously. The company is reaffirming its non-GAAP operating margin expectation of approximately 19.0 percent. Bio-Rad’s management will discuss this outlook in greater detail during the second-quarter 2022 financial results conference call.

Share Repurchase Program

On July 28, 2022, Bio-Rad announced that its board of directors authorized increasing the amount available under the company's Share Repurchase Program to allow the company to repurchase up to an additional $200 million of stock. Today, a total of $298.1 million is available for repurchases under the company's program.

Repurchases under the Share Repurchase Program may be made at management's discretion from time to time on the open market or through privately negotiated transactions. The Share Repurchase Program has no time limit and may be suspended for periods or discontinued at any time. Any shares acquired will be available for general corporate purposes, including supporting employee stock plans, funding acquisitions, and minimizing dilution from stock issuances.

Use of Non-GAAP and Currency-Neutral Reporting

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP EPS, which exclude amortization of acquisition-related intangible assets, certain acquisition-related expenses and benefits, restructuring charges, asset impairment charges, gains and losses from change in fair market value of equity securities and loan receivable, gains and losses on equity-method investments, and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:

Amortization of purchased intangible assets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of purchased intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Acquisition-related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our acquisitions, such as transaction costs, professional fees for assistance with the transaction; valuation or integration costs; changes in the fair value of contingent consideration, gain or loss on settlement of pre-existing relationships with the acquired entity; or adjustments to purchase price. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our ongoing business.

Restructuring, impairment charges, and gains and losses from change in fair market value of equity securities and loan receivable, and gains and losses on equity-method investments: we incur restructuring and impairment charges on individual or groups of employed assets and charges and benefits arising from gains and losses from change in fair market value of equity securities and loan receivable, and gains and losses on equity-method investments, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our ongoing operations with prior and future periods.

Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters because we do not believe they are reflective of ongoing business and operating results.

Income tax expense: we estimate the tax effect of the excluded items identified above to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.

From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.

Percentage sales growth in currency-neutral amounts are calculated by translating prior period sales in each local currency using the current period’s monthly average foreign exchange rates for that currency and comparing that to current period sales.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Conference Call and Webcast

Bio-Rad’s management will discuss the second quarter ended June 30, 2022 results in a conference call at 3 PM Pacific Time (6 PM Eastern Time) on July 28, 2022. To participate, call 844-200-6205 within the U.S. or +1 929-526-1599 outside the U.S., access code: 715914. A live webcast of the conference call will also be available in the "Investor Relations" section of the company’s website under "Events & Presentations" at investors.bio-rad.com. A replay of the webcast will be available for up to a year.

BIO-RAD and DROPLET DIGITAL PCR are trademarks of Bio-Rad Laboratories, Inc. in certain jurisdictions.

About Bio-Rad

Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb) is a global leader in developing, manufacturing, and marketing a broad range of innovative products for the life science research and clinical diagnostic markets. With 70 years of focus on quality and customer service, our products advance the scientific discovery process and improve healthcare. Our customers are universities, research institutions, hospitals, biotechnology and pharmaceutical companies, as well as public health and commercial laboratories including food safety and environmental quality testing facilities. Based in Hercules, California, Bio-Rad has a global network of operations with approximately 7,900 employees worldwide and $2.9 billion in revenues in 2021. For more information, please visit bio-rad.com.

Forward-Looking Statements

This release may be deemed to contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements we make regarding estimated future financial performance or results; in looking to the second half of the year, expecting the supply chain constraints to continue; remaining on track to achieve our full-year 2022 financial outlook; and for the full-year 2022, anticipating non-GAAP currency-neutral revenue growth to be at the high end of the prior 1.0 to 2.0 percent guidance, with Covid-related revenue expected to be about $93 million versus approximately $70 million previously, and continuing to anticipate non-GAAP operating margin of approximately 19.0 percent. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "anticipate," "estimate," "expect," "continue," "believe," "will," "project," "assume," "may," "intend," or similar expressions or the negative of those terms or expressions, although not all forward-looking statements contain these words. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. These risks and uncertainties include the duration, severity and impact of the COVID-19 pandemic, global economic conditions, supply chain issues, foreign currency exchange fluctuations, our ability to develop and market new or improved products, our ability to compete effectively, reductions in government funding or capital spending of our customers, international legal and regulatory risks, product quality and liability issues, our ability to integrate acquired companies, products or technologies into our company successfully, changes in the healthcare industry, and natural disasters and other catastrophic events beyond our control. For further information regarding the Company's risks and uncertainties, please refer to the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company's public reports filed with the Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 to be filed with the SEC. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. Bio-Rad Laboratories, Inc. disclaims any obligation to update these forward-looking statements.

Bio-Rad Laboratories, Inc.

Condensed Consolidated Statements of Income (Loss)

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Net sales

$

691,099

$

715,931

$

1,391,161

$

1,442,727

Cost of goods sold

295,118

314,333

591,620

640,502

Gross profit

395,981

401,598

799,541

802,225

Selling, general and administrative expense

208,730

213,425

406,324

439,278

Research and development expense

67,034

63,391

129,577

137,303

Income from operations

120,217

124,782

263,640

225,644

Interest expense

10,720

363

14,768

761

Foreign currency exchange (gains) losses, net

897

(1,761

)

(1,231

)

(1,690

)

(Gains) losses from change in fair market value of equity securities and loan receivable

1,338,190

(1,030,691

)

5,883,307

(2,210,094

)

Other (income) expense, net

(6,710

)

96

(39,307

)

(17,311

)

Income (loss) before income taxes

(1,222,880

)

1,156,775

(5,593,897

)

2,453,978

Benefit from (provision for) income taxes

295,696

(242,661

)

1,297,100

(562,450

)

Net income (loss)

$

(927,184

)

$

914,114

$

(4,296,797

)

$

1,891,528

Basic earnings (loss) per share:

Net income (loss) per basic share

$

(31.12

)

$

30.71

$

(143.88

)

$

63.49

Weighted average common shares - basic

29,794

29,764

29,863

29,793

Diluted earnings (loss) per share:

Net income (loss) per diluted share

$

(31.12

)

$

30.32

$

(143.88

)

$

62.70

Weighted average common shares - diluted

29,794

30,148

29,863

30,167

Note: As a result of the net loss for the three and six months ended June 30, 2022, all potentially issuable common shares have been excluded from the diluted shares used in the computation of earnings per share as their effect was anti-dilutive.

Bio-Rad Laboratories, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

June 30,

December 31,

2022

2021

(Unaudited)

Current assets:

Cash and cash equivalents

$

596,584

$

470,783

Short-term investments

1,376,635

404,695

Accounts receivable, net

450,324

423,537

Inventories, net

657,130

572,239

Other current assets

169,024

117,834

Total current assets

3,249,697

1,989,088

Property, plant and equipment, net

471,321

490,952

Operating lease right-of-use assets

185,150

204,798

Goodwill, net

347,323

347,343

Purchased intangibles, net

239,747

253,939

Other investments

8,088,002

14,387,006

Other assets

100,886

102,669

Total assets

$

12,682,126

$

17,775,795

Current liabilities:

Accounts payable, accrued payroll and employee benefits

$

338,890

$

418,927

Current maturities of long-term debt

466

489

Income and other taxes payable

25,908

46,299

Other current liabilities

248,450

215,223

Total current liabilities

613,714

680,938

Long-term debt, net of current maturities

1,196,943

10,514

Other long-term liabilities

1,948,872

3,417,209

Total liabilities

3,759,529

4,108,661

Total stockholders' equity

8,922,597

13,667,134

Total liabilities and stockholders' equity

$

12,682,126

$

17,775,795

Bio-Rad Laboratories, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Six Months Ended

June 30,

2022

2021

Cash flows from operating activities:

Cash received from customers

$

1,323,873

$

1,456,601

Cash paid to suppliers and employees

(1,201,166

)

(1,131,533

)

Interest paid, net

(440

)

(1,536

)

Income tax payments, net

(86,155

)

(77,573

)

Other operating activities

60,401

22,275

Net cash provided by operating activities

96,513

268,234

Cash flows from investing activities:

Payments for purchases of marketable securities and investments

(1,478,432

)

(255,277

)

Other investing activities

425,060

106,673

Net cash used in investing activities

(1,053,372

)

(148,604

)

Cash flows from financing activities:

Proceeds from issuance of Notes, net of debt financing costs

1,186,220

-

Payments on long-term borrowings

(254

)

(1,523

)

Other financing activities

(116,999

)

(42,959

)

Net cash provided by (used in) financing activities

1,068,967

(44,482

)

Effect of foreign exchange rate changes on cash

13,666

(5,102

)

Net increase in cash, cash equivalents and restricted cash

125,774

70,046

Cash, cash equivalents and restricted cash at beginning of period

471,133

667,115

Cash, cash equivalents and restricted cash at end of period

$

596,907

$

737,161

Reconciliation of net income (loss) to net cash provided by operating activities:

Net income (loss)

$

(4,296,797

)

$

1,891,528

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

64,625

66,388

Reduction in the carrying amount of right-of-use assets

20,008

19,556

(Gains) losses from change in fair market value of equity securities and loan receivable

5,883,307

(2,210,094

)

Changes in working capital

(243,442

)

(61,418

)

Other

(1,331,188

)

562,274

Net cash provided by operating activities

$

96,513

$

268,234

Bio-Rad Laboratories, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In thousands, except per share data)
(Unaudited)

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS), which exclude amortization of acquisition-related intangible assets; certain acquisition-related expenses and benefits; restructuring charges; asset impairment charges; gains and losses from change in fair market value of equity securities and loan receivable; gains and losses on equity-method investments; and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

June 30,

% of

June 30,

% of

June 30,

% of

June 30,

% of

2022

revenue

2021

revenue

2022

revenue

2021

revenue

GAAP cost of goods sold

$

295,118

$

314,333

$

591,620

$

640,502

Amortization of purchased intangibles

(4,450

)

(4,640

)

(8,911

)

(9,225

)

Legal settlements

-

-

-

536

Restructuring benefits (costs)

-

(1,209

)

(3

)

(25,189

)

Non-GAAP cost of goods sold

$

290,668

$

308,484

$

582,706

$

606,624

GAAP gross profit

$

395,981

57.3

%

$

401,598

56.1

%

$

799,541

57.5

%

$

802,225

55.6

%

Amortization of purchased intangibles

4,450

4,640

8,911

9,225

Legal settlements

-

-

-

(536

)

Restructuring (benefits) costs

-

1,209

3

25,189

Non-GAAP gross profit

$

400,431

57.9

%

$

407,447

56.9

%

$

808,455

58.1

%

$

836,103

58.0

%

GAAP selling, general and administrative expense

$

208,730

$

213,425

$

406,324

$

439,278

Amortization of purchased intangibles

(1,841

)

(2,355

)

(3,690

)

(4,710

)

Legal matters

(875

)

(8,761

)

(2,068

)

(13,176

)

Acquisition related benefits (costs)

-

40

-

40

Restructuring benefits (costs)

(19

)

6,929

(163

)

(27,806

)

Other non-recurring items (2)

(2,521

)

-

(5,330

)

-

Non-GAAP selling, general and administrative expense

$

203,474

$

209,278

$

395,073

$

393,626

GAAP research and development expense

$

67,034

$

63,391

$

129,577

$

137,303

Restructuring benefits (costs)

62

2,061