Bio-Rad Laboratories Inc (NYSE:BIO) Q3 2020 Earnings Conference Call - Final Transcript
Oct 29, 2020 • 06:00 pm ET
[Operator Instructions] Our first question comes from the line of Patrick Donnelly from Citi.
Great. Thanks guys. Ilan, probably one for you. Can you just break out the COVID sales a bit more and the expectations going into 4Q, certainly appreciate the smaller relative benefit, but any more granularity there would be helpful. And I was just wondering how much was related to PCR versus maybe some of the more instrument build-outs and how you're expecting that to trend?
Sure. Thank you, Patrick. So first of all, $98 million was the incremental revenue that was associated with the COVID-19 related sales. The vast majority is associated with our core PCR and DD PCR lesser extent, I mean, a very small number was associated with our serology test. And again, most of it were instruments and that's the split. And when you think about Q4, we currently believe that it will be a lower number than that Q3 number.
Okay. I guess I'm just kind of wondering should we expect a significant step-down or is it going to be in the same ballpark just slightly down from that kind of call it $100 million or so?
In Q2, if you recall, it was about $71 million overall with a similar kind of split between the core PCR, DD PCR and the serology in terms of the ratios and so far, it's a little bit difficult to tell. It's going to be probably somewhere in between those two, but may be slightly lower, but it's probably not going to be much less below the Q2 numbers. That's what we think about right now.
Okay. That's a helpful way to frame it. And then on the margin side, clearly saw some nice drop through from the big revenue beat there. Are you able to parse-out how much of the margin expansion was related to the COVID revenues coming in, obviously well above what we expected, I think you guys expected as well versus more kind of that core expansion that you've been obviously working on with the initiatives there.
Yeah. So definitely the COVID-related sales contributed both on the mix side as well as on the utilization and these were the main components. There was some headwind associated with freight for example, but for the most part, it is the mix and the contribution of with COVID-19 related products, as well as for the utilization in some of them on [Indecipherable] footprint.
Okay. And then one maybe -- it might be for Norm, if he is there, I mean, given the strong cash flow you guys are seeing, how are you guys thinking about the M&A landscape. I know over the past few quarters, you've talked a little bit about being more acquisitive on the larger side, obviously the Sartorius stake to your point there, it's gotten so big, you kind of have to look at some different regulations on the investment side if you wanted to monetize that, clearly a lot of dry