Bio-Rad Laboratories, Inc. (NYSE:BIO.B) Q4 2016 Earnings Conference Call - Final Transcript

Feb 23, 2017 • 05:00 pm ET


Bio-Rad Laboratories, Inc. (NYSE:BIO.B) Q4 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Bio-Rad Laboratories Incorporated Fourth Quarter 2016 Earnings Conference Call. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]

I would now like to introduce your host for today's conference, Mr. Ron Hutton, Vice President and Treasurer. Sir, you may begin.

Ronald W. Hutton

Thank you. Before we begin the call, I would like to caution everyone that we will be making forward-looking statements about management's goals, plans, expectations, our financial future performance and other matters. Because our actual results may differ materially from these plans and expectations, you should not place undue reliance on these forward-looking statements and I encourage you to review our filings with the SEC, where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today.

With that, I'd like to turn it over to Christine Tsingos, Executive Vice President and Chief Financial Officer.

Christine A. Tsingos

Thanks, Ron. Good afternoon, everyone, and thank you for joining us. Today, we will review the fourth quarter and full-year financial results for 2016, as well as provide some insight into our thinking for 2017. With me today are Norman Schwartz, John Goetz, Shannon Hall, President of our Life Science Group, John Hertia, President of our Diagnostics Group; and Annette Tumolo, Executive Vice President of our Digital Biology Group. As some of you may already know, Annette oversees our Droplet Digital businesses and will now also be providing leadership over our new RainDance operations.

Let's start with a review of the quarterly results. Net sales for the fourth quarter of fiscal 2016 were $571.5 million, up slightly when compared to the year ago period sales of $570.6 million. On a currency-neutral basis, quarterly sales growth was approximately 1%. As we cautioned on our last call, sales of Life Science products were down year-over-year, primarily as a result of a tough compare to the fourth quarter of 2015. This tough compare is related to more than $10 million of backlog that was pushed into the year ago period as well as in sales of process media products, which were also strong in Q4 of last year.

Partially offsetting this tough compare for the Life Science segment were continued strong sales of our Droplet Digital PCR instruments and consumables. Our Clinical Diagnostics Group continued to post strong top line growth during the fourth quarter, particularly in sales of our diabetes monitoring and auto immune testing products, as well as quality controls. The consolidated gross margin for the quarter was better than expectations at 55% and compares to last year's gross margin of 54.1%.

The improvement in gross margin is attributable to our Diagnostics Group and largely the result of improved product mix, overhead absorption and lower amortization of intangibles. During the fourth quarter, we recorded a total of approximately $4.5 million in cost of goods sold for the non-cash purchase accounting expense related to acquisition. This