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Bio-Rad Reports Fourth-Quarter and Full-Year 2020 Financial Results

BusinessWire

HERCULES, Calif.–(BUSINESS WIRE)–Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global leader of life science research and clinical diagnostic products, today announced financial results for the fourth quarter ended December 31, 2020.

Fourth-quarter 2020 net sales were $789.8 million, an increase of 26.5 percent compared to $624.4 million reported for the fourth quarter of 2019. On a currency-neutral basis, quarterly sales increased 24.4 percent compared to the same period in 2019. Fourth-quarter gross margin was 58.3 percent compared to 52.9 percent during the fourth quarter in 2019. Fourth quarter sales included a $32.0 million damages award related to intellectual property litigation, covering the period between 2015-2018.

Life Science segment net sales for the fourth quarter were $428.5 million, an increase of 77.1 percent compared to the same period in 2019. On a currency-neutral basis, Life Science segment sales increased by 73.9 percent compared to the same quarter in 2019. Currency-neutral sales growth was primarily attributed to sales of our PCR product lines that experienced significant demand resulting from the COVID-19 pandemic as well as strong performance in the biopharma segment. The fourth-quarter revenue also included a $32.0 million damages award related to intellectual property litigation. On a geographic view, all regions experienced currency-neutral sales growth compared to the same quarter last year.

Today, Bio-Rad was granted Emergency Use Authorization (EUA) approval from the U.S. Food and Drug Administration (FDA) for a COVID, influenza A, and influenza B RT-PCR syndromic multiplex test. The test, which allows discrimination between each of the three different viruses, runs on Bio-Rad’s CFX qPCR platforms as well as on qPCR systems from other providers. In addition, last month, the FDA granted an EUA for our COVID RT-PCR assay kit that also runs on Bio-Rad’s existing CFX qPCR platforms as well as qPCR systems from other providers. Both of these assay kits have been designed to ensure greater sensitivity and tolerance to potential mutations.

Clinical Diagnostics segment net sales for the fourth quarter were $359.6 million, a decrease of 5.1 percent compared to the same period in 2019. On a currency-neutral basis, net sales were down 6.6 percent versus the same quarter last year. The currency-neutral sales decrease was primarily driven by lower demand resulting from the COVID-19 pandemic and was across most product lines and across all regions.

Income from operations during the fourth quarter of 2020 was $175.2 million versus $59.2 million during the same quarter last year.

Net income for the fourth quarter of 2020 was $839.1 million, or $27.81 per share, on a diluted basis, versus $553.5 million, or $18.31 per share, on a diluted basis, during the

same period in 2019. Net income for the fourth quarter of 2020 and 2019 was impacted by the recognition of changes in the fair market value of equity securities, primarily related to the holdings of our investment in Sartorius AG. The effective tax rate for the fourth quarter of 2020 was 22.2 percent, compared to 20.9 percent for the same period in 2019. The tax rates for the fourth quarter of 2020 and 2019 were affected by the large unrealized gain in equity securities. In addition, the 2019 tax rate included a tax benefit related to U.S. Tax Reform regulatory guidance issued in the quarter.

“While many of our markets are still operating at less than 100 percent, our COVID-19 related products surpassed expectations in the fourth quarter, and we experienced a larger than normal end-of-year budget release,” said Norman Schwartz, Bio-Rad President and Chief Executive Officer. “All of this combined to produce a strong finish for the year.”

GAAP Results

 

Q4 2020

Q4 2019

Revenue (millions)

$789.8

$624.4

Gross margin

58.3%

52.9%

Operating margin

22.2%

9.5%

Net income (millions)

$839.1

$553.5

Income per diluted share

$27.81

$18.31

 

Non-GAAP Results

 

Q4 2020

Q4 2019

Revenue (millions)

$757.9

$624.4

Gross margin

58.2%

54.1%

Operating margin

21.4%

14.3%

Net income (millions)

$121.0

$70.0

Income per diluted share

$4.01

$2.32

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 valuation changes in equity-owned securities; 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 Reporting.”

Non-GAAP net income for the fourth quarter of 2020 was $121.0 million, or $4.01 per share, on a diluted basis, compared to $70.0 million, or $2.32 per share, on a diluted basis, during the same period in 2019.

The non-GAAP effective tax rate for the fourth quarter of 2020 was 24.3 percent, compared to 17.7 percent for the same period in 2019. The lower rate in 2019 was driven by favorable regulatory guidance relating to U.S. Tax reform issued in the fourth quarter of 2019.

The following table represents a reconciliation of Bio-Rad’s reported net income and diluted income per share to non-GAAP net income and non-GAAP diluted income per share for the three months and full year ended December 31, 2020 and 2019:

(in thousands, except per share data)

Three Months Ended

December 31,

Year Ended

December 31,

 

2020

2019

2020

2019

 

GAAP net income

$839,102

$553,486

$3,806,267

$1,758,675

Amortization of purchased intangibles

7,032

6,663

27,289

23,153

Legal matters

(19,984)

2,248

(9,589)

6,841

Acquisition related benefits

(3,323)

(2,849)

(4,160)

(10,611)

Restructuring (benefits) costs

(94)

23,720

(921)

29,469

Valuation gain on equity-owned securities

(904,316)

(645,988)

(4,495,825)

(2,030,987)

Loss on equity-method investments

2,072

1,845

4,706

2,543

Other non-recurring items

–

–

(11,680)

(759)

Income tax effect on non-GAAP adjustments

200,524

130,871

1,001,155

434,761

Non-GAAP net income

$121,013

$69,996

$317,242

$213,085

 

 

 

 

 

 

GAAP diluted income per share

$27.81

$18.31

$126.20

$58.27

 

Non-GAAP diluted income per share

$4.01

$2.32

$10.52

$7.06

Full Year 2020 Results

On a reported basis, net sales for the full year 2020 increased 10.1 percent to $2,545.6 million compared to $2,311.7 million for the same period in 2019. On a currency-neutral basis, net sales grew 10.3 percent. Full-year reported net sales for the Life Science segment were $1,231.8 million, an increase of 39.0 percent compared to 2019. On a currency-neutral basis, sales increased 38.6 percent versus 2019. Full-year reported net sales for the Clinical Diagnostics segment were $1,305.2 million, compared to 2019, or a decrease of 7.1 percent on a currency-neutral basis. Full-year gross margin was 56.5 percent, compared to 54.4 percent during the same period in 2019.

Net income for 2020 was $3,806.3 million, or $126.20 per share, on a fully diluted basis, compared to $1,758.7 million, or $58.27 per share, during the same period in 2019. As mentioned earlier, the COVID-19 pandemic impacted overall results for the year. On a non-GAAP basis, net income for 2020 was $317.2 million, or $10.52 per share, compared to $213.1 million, or $7.06 per share, during the same period in 2019.

The effective tax rate in 2020 was 22.4 percent compared to 22.2 percent in 2019. The tax rate in 2020 and 2019 was affected by the large unrealized gain in equity securities.

“Despite a challenging and unprecedented year, we are pleased with our overall performance in 2020,” Mr. Schwartz said. “We efficiently responded to the needs of our customers and our tight cost controls resulted in a robust operating profit improvement over 2019. We would like to recognize employees across our organization who have gone above and beyond to serve customers during this time. Our underlying progress in 2020 is a good base from which to grow as we head into the new year.”

2020 Full-Year Highlights

2021 Financial Outlook

For the full year 2021, the company anticipates non-GAAP currency-neutral revenue growth of approximately 4.5 to 5.0 percent and an estimated non-GAAP operating margin of approximately 16.0 to 16.5 percent. Management will discuss this outlook in greater detail on the fourth-quarter and full-year 2020 financial results conference call.

“Looking ahead to 2021, we anticipate another year of progress, building on the operating efficiencies we achieved this year,” Mr. Schwartz said. “We expect the pandemic to continue well into 2021 with a gradual recovery in our end markets as the year progresses.”

Use of Non-GAAP Reporting and Currency-Neutral

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, valuation changes of equity-owned securities, 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 on-going business.

Restructuring, impairment charges and valuation changes in equity-owned securities 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 valuation changes in equity-owned securities 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 on-going 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 on-going 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

Management will discuss fourth-quarter and full-year ended December 31, 2020 results in a conference call at 3 PM Pacific Time (6 PM Eastern Time) February 11, 2021. To listen, call 855-779-9068 within the U.S. or 631-485-4862 outside the U.S., Conference ID: 8269933. You may also listen to the conference call live via a webcast that is available on the “Investor Relations” section of our website under “Quarterly Results” at bio-rad.com. 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 a focus on quality and customer service for over 65 years, our products advance the discovery process and improve healthcare. Our customers are university and research institutions, hospitals, public health and commercial laboratories, biotechnology and pharmaceutical companies, as well as applied laboratories that include food safety and environmental quality. Founded in 1952, Bio-Rad is based in Hercules, California, and has a global network of operations with more than 7,800 employees worldwide. Bio-Rad had revenues exceeding $2.5 billion in 2020. For more information, please visit bio-rad.com.

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; that our underlying progress in 2020 is a good base from which to grow as we head into the new year; for the full year 2021 anticipating non-GAAP currency-neutral revenue growth of approximately 4.5 to 5.0 percent and an estimated non-GAAP operating margin of approximately 16.0 to 16.5 percent; anticipating another year of progress in 2021 and building on the operating efficiencies we achieved this year; and expecting the pandemic to continue well into 2021 with a gradual recovery in our end markets as the year progresses. 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, our ability to develop and market new or improved products, our ability to compete effectively, foreign currency exchange fluctuations, reductions in government funding or capital spending of our customers, international legal and regulatory risks, supply chain issues, 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, 2019, its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, and its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 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
 
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended Year Ended
December 31, December 31,

2020

 

2019

 

2020

 

2019

Net sales

$

789,839

 

$

624,428

 

$

2,545,626

 

$

2,311,659

 

Cost of goods sold

 

329,684

 

 

293,989

 

 

1,107,804

 

 

1,054,663

 

Gross profit

 

460,155

 

 

330,439

 

 

1,437,822

 

 

1,256,996

 

 
Selling, general and administrative expense

 

219,148

 

 

214,165

 

 

800,267

 

 

824,625

 

Research and development expense

 

65,765

 

 

57,069

 

 

226,598

 

 

202,710

 

Income from operations

 

175,242

 

 

59,205

 

 

410,957

 

 

229,661

 

 
Interest expense

 

4,703

 

 

6,064

 

 

21,861

 

 

23,416

 

Foreign currency exchange (gains) losses, net

 

(707

)

 

(1,166

)

 

1,771

 

 

2,245

 

Change in fair market value of equity securities

 

(904,316

)

 

(645,988

)

 

(4,495,825

)

 

(2,030,987

)

Other (income) expense, net

 

(2,971

)

 

865

 

 

(24,488

)

 

(26,094

)

Income before income taxes

 

1,078,533

 

 

699,430

 

 

4,907,638

 

 

2,261,081

 

 
Provision for income taxes

 

(239,431

)

 

(145,944

)

 

(1,101,371

)

 

(502,406

)

Net income

$

839,102

 

$

553,486

 

$

3,806,267

 

$

1,758,675

 

 
Basic earnings per share:
Net income per basic share

$

28.13

 

$

18.50

 

$

127.86

 

$

58.93

 

 
Weighted average common shares – basic

 

29,833

 

 

29,924

 

 

29,768

 

 

29,843

 

 
Diluted earnings per share:
Net income per diluted share

$

27.81

 

$

18.31

 

$

126.20

 

$

58.27

 

 
Weighted average common shares – diluted

 

30,170

 

 

30,221

 

 

30,160

 

 

30,184

 

Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
December 31, December 31,

2020

2019

 
Current assets:
Cash and cash equivalents

$

662,205

$

660,672

Short-term investments

 

334,473

 

459,533

Accounts receivable, net

 

419,424

 

392,672

Inventories, net

 

622,253

 

554,007

Other current assets

 

101,480

 

113,271

Total current assets

 

2,139,835

 

2,180,155

 
Property, plant and equipment, net

 

491,371

 

499,339

Operating lease right-of-use assets

 

202,136

 

201,868

Goodwill, net

 

291,916

 

264,131

Purchased intangibles, net

 

199,497

 

145,525

Other investments

 

9,561,140

 

4,638,205

Other assets

 

86,723

 

79,636

Total assets

$

12,972,618

$

8,008,859

 
Current liabilities:
Accounts payable, accrued payroll and employee benefits

$

362,326

$

287,098

Current maturities of long-term debt

 

1,798

 

426,172

Income and other taxes payable

 

57,335

 

36,285

Other current liabilities

 

210,077

 

155,940

Total current liabilities

 

631,536

 

905,495

 
Long-term debt, net of current maturities

 

12,258

 

13,579

Other long-term liabilities

 

2,448,884

 

1,334,728

Total liabilities

 

3,092,678

 

2,253,802

 
Total stockholders’ equity

 

9,879,940

 

5,755,057

Total liabilities and stockholders’ equity

$

12,972,618

$

8,008,859

Contacts

Investor Contact:

Ilan Daskal, Executive Vice President

& Chief Financial Officer

510-724-7000

investor_relations@bio-rad.com

Press Contact:
Tina Cuccia, Manager, Corporate Communications

510-724-7000

tina_cuccia@bio-rad.com

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