The operator introduces the Bio-Rad First Quarter 2024 Earnings Results Conference Call and turns it over to Edward Chung, head of investor relations. Chung cautions listeners about the forward-looking statements that will be made and encourages them to review the company's SEC filings. He also mentions that the company will be discussing non-GAAP financials. CEO Norman Schwartz then takes over to begin the review of the first quarter 2024 financial results and provide an update on key business trends.

The paragraph introduces the new CFO, Roop Lakkaraju, and mentions his experience and contributions to the company. The CEO addresses questions about management turnover and explains that it is a normal progression for individuals and the company. He also mentions that positions are being filled with both external and internal candidates, and that these changes bring fresh insights and ideas to the company. The call is then turned over to Andy Last for an update on Bio Rad's global operations.

The first quarter of 2024 saw similar trends in the biotech and bio-pharma segments, China, and Russia as in 2023. The life science group met expectations with a decline in sales due to a tough comparison from the previous year. However, the clinical diagnostics group showed growth in all regions. The life science business experienced a decline in process chromatography sales due to destocking in the industry, but the company remains positive about long-term growth potential. Overall, the core life science business declined in the mid-teens, with instrument sales being the main contributor. The company is anticipating new product launches in the coming year, which are factored into their outlook.

Bio Rad's droplet digital PCR franchise saw a slight decline in Q1 compared to the overall core life science sales. However, the company announced two deals to drive penetration of the platform into advanced clinical diagnostic use. They also released a new multiplex mutation detection assay for breast cancer and their partner genoscopy received FDA approval for their non-invasive colorectal cancer screening test that runs on Bio Rad's digital PCR platform. In the clinical diagnostics business, the company saw solid mid single digit growth and strong sales in EMEA and Asia Pacific. The new manufacturing facility in Singapore is now fully operational, stabilizing instrument supply for the clinical platform.

The first quarter of 2024 saw a decline in net sales of 9.8%, primarily due to weak life science markets. However, the clinical diagnostics group showed steady growth. The decline was slightly offset by positive trends in capital raises and government stimulus announcements. The company remains cautious about the timing and magnitude of market recovery but expects improvements in the second half of the year. The financial results for the quarter were $611 million, a 9.8% decline from the previous year.

In the first quarter of 2024, the sales for the life Science group decreased by 25.3% on a reported basis and 25.2% on a currency neutral basis compared to the same period in 2023. However, the clinical diagnostics group saw an increase in sales of 4.7% on a reported basis and 4.8% on a currency neutral basis. This growth was driven by increased demand for quality controls, blood typing, and diabetes on a geographic basis. The company also maintained a tight focus on manufacturing costs, resulting in a reported gross margin of 53.4%. SG&A expenses decreased due to cost reduction initiatives, while research and development expenses decreased slightly compared to the previous year.

The decrease in year-over-year operating income for Q1 was mainly due to lower sales and decreased employee expenses. The change in fair market value of equity securities, primarily related to Bio-Rad's ownership of Sartorius AG shares, added $422 million to the reported results. Interest and other income also decreased due to a lower Sartorius dividend. The effective tax rate increased due to the accounting treatment of equity securities. Net income for Q1 was significantly higher compared to the previous year, largely due to changes in the valuation of Sartorius holdings. The non-GAAP results excluded certain atypical and unique items, such as amortization of purchased intangibles and restructuring expenses, from the cost of goods sold.

The first quarter of 2024 saw a decrease in non-GAAP gross margin to 54.2%, with higher SG&A expenses as a percentage of sales due to lower revenue. Non-GAAP operating margin decreased from 12.4% to 9.7% compared to the same period in 2023. Non-GAAP net income was $65 million, or $2.29 diluted earnings per share, compared to $99 million, or $3.34 diluted earnings per share in Q1 of 2023. Cash and short term investments at the end of Q1 2024 were $1,651,000,000, slightly higher than the end of 2023.

The paragraph discusses the change in cash and short term investments from the fourth quarter of 2023, as well as the net cash generated from operating activities and capital expenditures in the first quarter of 2024. It also mentions the adjusted EBITDA for both quarters and the company's share repurchase program. The non-GAAP guidance for the company's life science and clinical diagnostics groups is also mentioned, with a cautious outlook for the life science group but expected growth for the clinical diagnostics group. The company maintains its full year outlook for revenue growth and non-GAAP operating margin. The concluding remarks reiterate the company's strategy and focus for future growth.

The company has strong market positions in clinical diagnostics and continues to invest in new molecular diagnostic segments. They also maintain a focus on biopharma and are well positioned for long term growth in the academic markets. The life science business had a slight miss in the quarter, mainly due to softness in process chromatography. However, the company maintains their full year guidance and expects growth in this segment for the year. The quarter was tough compared to the previous year.

The core life science business met expectations, but process chromatography was softer than anticipated, leading to a lower outlook for the rest of the year. However, the company is not losing customers and is still maintaining or winning market share. The main issue is a decrease in capital spend on equipment. The company is still on track to meet its overall guidance for the year, with strength in clinical diagnostics helping to offset the softer performance in process chromatography. The digital PCR franchise performed better than the core life science business, with a single digit percentage decline in instruments.

The company's consumable reagent pull through was good and they expect the franchise to recover in line with market recovery. They have not seen any changes in their win loss ratio and their major competition is showing improvement. They will be entering a new segment later this year. The company is encouraged by the influx of capital in the biotech industry, but it has not yet translated into orders. The guidance for the second half of the year is steeper and the company is confident in maintaining it, but they have not seen improvement in orders yet. They are starting to have more positive conversations in the life sciences segment.

The speaker, Andy Last, is asked about the company's performance in the biotech and biopharma sector. He mentions that they are seeing encouraging signs for the second half of the year, but also expect challenges in the chromatography business due to destocking. He also talks about growth in their clinical diagnostics business. The gross margin came in better than expected due to cost actions and favorable mix. The company expects a slight movement in gross margin quarter-to-quarter, but remains confident in their overall outlook for the year. The question then shifts to Norman, who is asked about updates on management hires for the new COO and head of diagnostics.

Norman Schwartz and Roop Lakkaraju discuss the progress of hiring for the COO position and the guidance for 2024 at Bio Rad. Lakkaraju explains how he integrated into the existing business review process and considered revenue drivers, market conditions, and cost actions to determine the margin profile. They also discuss the impact of factors like materials pricing and logistics trends on the opex.

The company has analyzed the operating income based on different drivers and feedback from the sales team, which has given them confidence in reiterating their guidance. They have also considered the quarter-to-quarter trend for the year. There has not been any significant employee turnover due to the recent management departures. The company has announced some partnerships for ddPCR, which will have varying revenue opportunities and may result in additional equipment placements and consumable pull-through.

Allegheny is focused on creating value through clinical insight and long-term strategies, while Genoscopy's platform will generate revenue opportunities for the company. This will not have an immediate impact, but is part of a solid long-term strategy. The company will be attending upcoming healthcare conferences and appreciates the interest of investors.

The speaker is ending the call and thanking everyone for joining the Bio-Rad first quarter earnings results call. They wish everyone a great day and say goodbye.

This summary was generated with AI and may contain some inaccuracies.