Bio-Rad Laboratories, Inc 8-K, filed Oct 28, 2021
Bio-Rad Laboratories, Inc. (BIO)
8-K
2021-10-28
For: 2021-10-28
View Original
Added on
April 11, 2026
About this 8-K
Bio-Rad Laboratories, Inc filed this 8-K on October 28, 2021.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 28, 2021
(Date of earliest event reported)
(Exact name of registrant as specified in its charter)
Commission File Number: 1-7928
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices, including zip code)
(510 )724-7000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||||
ITEM 2.02 Results of Operations and Financial Condition
On October 28, 2021, Bio-Rad Laboratories, Inc. announced its financial results for the quarter ended September 30, 2021. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01 Financial Statements and Exhibits
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 104.1 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BIO-RAD LABORATORIES, INC. | ||||||||||||||
| Date: | October 28, 2021 | By: | /s/ Ilan Daskal | |||||||||||
| Ilan Daskal | ||||||||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||
Exhibit 99.1
Press Release
Bio-Rad Reports Third-Quarter 2021 Financial Results
HERCULES, Calif.–October 28, 2021–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 third quarter ended September 30, 2021.
Third-quarter 2021 net sales were $747.0 million, an increase of 15.4 percent compared to $647.3 million reported for the third quarter of 2020. On a currency-neutral basis, quarterly sales increased 13.8 percent compared to the same period in 2020. Third-quarter gross margin was 58.6 percent compared to 56.7 percent during the third quarter in 2020.
Life Science segment net sales for the third quarter were $373.5 million, an increase of 15.3 percent compared to the same period in 2020. On a currency-neutral basis, Life Science segment sales increased by 13.9 percent compared to the same quarter in 2020. Currency-neutral sales growth was primarily attributed to sales of our Droplet Digital PCR® and Process Media product lines, as well as back royalties from a legal settlement. On a geographic basis, Life Science currency-neutral year-over-year sales grew across the Americas and Asia but declined in Europe. Excluding COVID19-related sales, European region revenue posted a double-digit percent increase from the year ago period.
Clinical Diagnostics segment net sales for the third quarter were $372.2 million, an increase of 15.5 percent compared to the same period in 2020. On a currency-neutral basis, net sales increased 13.7 percent versus the same quarter last year. Currency-neutral sales were up for all product lines and across all regions, primarily driven by higher utilization in lab operations as businesses recover from the COVID-19 pandemic.
Income from operations during the third quarter of 2021 was $156.8 million versus $109.6 million during the same quarter last year.
Net income for the third quarter of 2021 was $3,928.0 million, or $129.96 per share on a diluted basis, versus $1,314.8 million, or $43.64 per share on a diluted basis, during the same period in 2020. Net income for the third quarter of 2021 and 2020 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 third quarter of 2021 was 21.8 percent, compared to 21.9 percent for the same period in 2020. The tax rates for both periods were driven by the large unrealized gain in equity securities.
“We are pleased with our performance in the third quarter, which reflected strength across many product lines,” said Norman Schwartz, Bio-Rad President and Chief Executive Officer. “During the quarter, demand continued for products associated with COVID-19 testing and research, though at a more moderate level,” he said.
1
| GAAP Results | ||||||||
| Q3 2021 | Q3 2020 | |||||||
| Revenue (millions) | $ | 747.0 | $ | 647.3 | ||||
| Gross margin | 58.6 | % | 56.7 | % | ||||
| Operating margin | 21.0 | % | 16.9 | % | ||||
| Net income (millions) | $ | 3,928.0 | $ | 1,314.8 | ||||
| Income per diluted share | $ | 129.96 | $ | 43.64 | ||||
| Non-GAAP Results | ||||||||
| Q3 2021 | Q3 2020 | |||||||
| Revenue (millions) | $ | 715.2 | $ | 647.3 | ||||
| Gross margin | 57.9 | % | 57.5 | % | ||||
| Operating margin | 19.4 | % | 18.8 | % | ||||
| Net income (millions) | $ | 112.2 | $ | 90.3 | ||||
| Income per diluted share | $ | 3.71 | $ | 3.00 | ||||
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 third quarter of 2021 was $112.2 million, or $3.71 per share on a diluted basis, compared to $90.3 million, or $3.00 per share on a diluted basis, during the same period in 2020.
The non-GAAP effective tax rate for the third quarter of 2021 was 18.0 percent, compared to 22.5 percent for the same period in 2020. The lower rate in 2021 was driven by the geographic mix of earnings. In addition, the effective tax rate was lower as a result of an increase in compensation related tax deductions.
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 and nine months ended September 30, 2021 and 2020:
2
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| (in thousands, except per share data) | September 30, | September 30, | ||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| GAAP net income | $ | 3,928,033 | $ | 1,314,824 | $ | 5,819,561 | $ | 2,967,165 | ||||||||||||||||||
| Legal settlements | (28,083) | — | (28,619) | — | ||||||||||||||||||||||
| Amortization of purchased intangibles | 7,097 | 7,163 | 21,032 | 20,257 | ||||||||||||||||||||||
| Legal matters | 2,325 | 5,977 | 15,501 | 10,395 | ||||||||||||||||||||||
| Acquisition related costs (benefits) | — | 165 | (40) | (837) | ||||||||||||||||||||||
| Restructuring costs (benefits) | 15 | (1,111) | 67,799 | (827) | ||||||||||||||||||||||
| Valuation gain on equity-owned securities | (4,868,659) | (1,580,350) | (7,078,753) | (3,591,509) | ||||||||||||||||||||||
| Loss on equity-method investments | 1,899 | 183 | 5,579 | 2,634 | ||||||||||||||||||||||
| Other non-recurring items | — | — | — | (11,680) | ||||||||||||||||||||||
| Income tax effect on non-GAAP adjustments | 1,069,577 | 343,401 | 1,554,100 | 800,631 | ||||||||||||||||||||||
| Non-GAAP net income | $ | 112,204 | $ | 90,252 | $ | 376,160 | $ | 196,229 | ||||||||||||||||||
| GAAP diluted income per share | $ | 129.96 | $ | 43.64 | $ | 192.76 | $ | 98.46 | ||||||||||||||||||
| Non-GAAP diluted income per share | $ | 3.71 | $ | 3.00 | $ | 12.46 | $ | 6.51 | ||||||||||||||||||
On a reported basis, net sales for the first three quarters of 2021 increased 24.7 percent to $2,189.8 million compared to $1,755.8 million for the same period in 2020. On a currency-neutral basis, net sales grew 21.2 percent.
Year-to-date net income for 2021 was $5,819.6 million, or $192.76 per share on a fully diluted basis, compared to $2,967.2 million, or $98.46 per share during the same period in 2020. The COVID-19 pandemic positively impacted overall results for the first three quarters of the year. On a non-GAAP basis net income for the first three quarters of 2021 was $376.2 million, or $12.46 per share, compared to $196.2 million, or $6.51 per share during the same period in 2020.
“Throughout the year we adapted well to challenges posed by the COVID-19 pandemic, supporting our customers and ensuring the safety of our employees while continuing to make progress on our core strategies,” Mr. Schwartz said. “As we head into the end of 2021, we will continue to build on the progress we’ve made during the first three quarters and expect to generate improved operating profit over 2020,” he added.
2021 Financial Outlook
For the full year 2021, the company has updated its guidance and now anticipates non-GAAP currency-neutral revenue growth between 12 to 13 percent and an estimated non-GAAP operating margin of approximately 19.5 percent. Management will discuss this outlook in greater detail on the third-quarter 2021 financial results conference call.
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, income tax provisions/benefits related to the previous items, and significant discrete tax
3
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 income 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.
4
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 third-quarter ended September 30, 2021 results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) October 28, 2021. To listen, call 844-200-6205 within the U.S. or 929-526-1599 outside the U.S., access code: 535686. 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 approximately 7,800 employees worldwide. Bio-Rad had revenues exceeding $2.5 billion in 2020. Please visit bio-rad.com for further information.
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; anticipating non-GAAP currency-neutral revenue growth of between 12 to 13 percent and an estimated non-GAAP operating margin of approximately 19.5 percent for the full year 2021; continuing to build on the progress we’ve made during the first three quarters as we head into the end of 2021; and expecting to generate improved operating profit over 2020. 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
5
products, our ability to compete effectively, foreign currency exchange fluctuations, supply chain issues, 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, 2020, and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 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.
Investor Contact:
Edward Chung, Vice President, Investor Relations
510-741-6577
ir@bio-rad.com
Media Contact:
Tina Cuccia, Manager, Corporate Communications
510-741-6063
tina_cuccia@bio-rad.com
6
Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 747,049 | $ | 647,263 | $ | 2,189,776 | $ | 1,755,787 | |||||||||||||||
| Cost of goods sold | 309,614 | 279,952 | 950,116 | 778,120 | |||||||||||||||||||
| Gross profit | 437,435 | 367,311 | 1,239,660 | 977,667 | |||||||||||||||||||
| Selling, general and administrative expense | 216,150 | 198,165 | 655,428 | 581,119 | |||||||||||||||||||
| Research and development expense | 64,481 | 59,546 | 201,784 | 160,833 | |||||||||||||||||||
| Income from operations | 156,804 | 109,600 | 382,448 | 235,715 | |||||||||||||||||||
| Interest expense | 426 | 5,728 | 1,187 | 17,158 | |||||||||||||||||||
| Foreign currency exchange losses, net | 2,232 | 776 | 542 | 2,478 | |||||||||||||||||||
| Change in fair market value of equity securities | (4,868,659) | (1,580,350) | (7,078,753) | (3,591,509) | |||||||||||||||||||
| Other expense (income), net | 579 | (1,015) | (16,732) | (21,517) | |||||||||||||||||||
| Income before income taxes | 5,022,226 | 1,684,461 | 7,476,204 | 3,829,105 | |||||||||||||||||||
| Provision for income taxes | (1,094,193) | (369,637) | (1,656,643) | (861,940) | |||||||||||||||||||
| Net income | $ | 3,928,033 | $ | 1,314,824 | $ | 5,819,561 | $ | 2,967,165 | |||||||||||||||
| Basic earnings per share: | |||||||||||||||||||||||
| Net income per basic share | $ | 131.75 | $ | 44.24 | $ | 195.29 | $ | 99.75 | |||||||||||||||
| Weighted average common shares - basic | 29,814 | 29,721 | 29,800 | 29,746 | |||||||||||||||||||
| Diluted earnings per share: | |||||||||||||||||||||||
| Net income per diluted share | $ | 129.96 | $ | 43.64 | $ | 192.76 | $ | 98.46 | |||||||||||||||
| Weighted average common shares - diluted | 30,224 | 30,128 | 30,190 | 30,137 | |||||||||||||||||||
7
Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| September 30, 2021 | December 31, 2020 | ||||||||||
| (Unaudited) | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 859,902 | $ | 662,205 | |||||||
| Short-term investments | 482,756 | 334,473 | |||||||||
| Accounts receivable, net | 417,714 | 419,424 | |||||||||
| Inventories, net | 588,911 | 622,253 | |||||||||
| Other current assets | 117,003 | 101,480 | |||||||||
| Total current assets | 2,466,286 | 2,139,835 | |||||||||
| Property, plant and equipment, net | 476,648 | 491,371 | |||||||||
| Operating lease right-of-use assets | 204,191 | 202,136 | |||||||||
| Goodwill, net | 291,916 | 291,916 | |||||||||
| Purchased intangibles, net | 177,073 | 199,497 | |||||||||
| Other investments | 16,230,635 | 9,561,140 | |||||||||
| Other assets | 106,631 | 86,723 | |||||||||
| Total assets | $ | 19,953,380 | $ | 12,972,618 | |||||||
| Current liabilities: | |||||||||||
| Accounts payable, accrued payroll and employee benefits | $ | 380,344 | $ | 362,326 | |||||||
| Current maturities of long-term debt | 1,739 | 1,798 | |||||||||
| Income and other taxes payable | 54,050 | 57,335 | |||||||||
| Other current liabilities | 213,783 | 210,077 | |||||||||
| Total current liabilities | 649,916 | 631,536 | |||||||||
| Long-term debt, net of current maturities | 10,645 | 12,258 | |||||||||
| Other long-term liabilities | 3,960,441 | 2,448,884 | |||||||||
| Total liabilities | 4,621,002 | 3,092,678 | |||||||||
| Total stockholders’ equity | 15,332,378 | 9,879,940 | |||||||||
| Total liabilities and stockholders’ equity | $ | 19,953,380 | $ | 12,972,618 | |||||||
8
Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Cash received from customers | $ | 2,177,199 | $ | 1,741,431 | |||||||
| Cash paid to suppliers and employees | (1,597,938) | (1,406,427) | |||||||||
| Interest paid, net | (1,848) | (11,066) | |||||||||
| Income tax payments, net | (103,902) | (51,539) | |||||||||
| Other operating activities | 25,086 | 18,195 | |||||||||
| Net cash provided by operating activities | 498,597 | 290,594 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Payments for acquisitions | — | (96,655) | |||||||||
| Other investing activities | (229,954) | 86,514 | |||||||||
| Net cash used in investing activities | (229,954) | (10,141) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments on long-term borrowings | (1,645) | (1,780) | |||||||||
| Other financing activities | (58,419) | (99,377) | |||||||||
| Net cash used in financing activities | (60,064) | (101,157) | |||||||||
| Effect of foreign exchange rate changes on cash | (11,174) | 3,154 | |||||||||
| Net increase in cash, cash equivalents, and restricted cash | 197,405 | 182,450 | |||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 667,115 | 662,651 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 864,520 | $ | 845,101 | |||||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
| Net income | $ | 5,819,561 | $ | 2,967,165 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 100,075 | 101,938 | |||||||||
| Reduction in the carrying amount of right-of-use assets | 29,311 | 27,694 | |||||||||
| Changes in working capital | (14,538) | (44,360) | |||||||||
| Other | (5,435,812) | (2,761,843) | |||||||||
| Net cash provided by operating activities | $ | 498,597 | $ | 290,594 | |||||||
9
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; 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.
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2021 | % of revenue | September 30, 2020 | % of revenue | September 30, 2021 | % of revenue | September 30, 2020 | % of revenue | ||||||||||||||||||||||||||||||||||||||||
| GAAP net sales | $ | 747,049 | $ | 647,263 | $ | 2,189,776 | $ | 1,755,787 | |||||||||||||||||||||||||||||||||||||||
| Legal settlements | (31,843) | — | (31,843) | — | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net sales | $ | 715,206 | $ | 647,263 | $ | 2,157,933 | $ | 1,755,787 | |||||||||||||||||||||||||||||||||||||||
| GAAP cost of goods sold | $ | 309,614 | $ | 279,952 | $ | 950,116 | $ | 778,120 | |||||||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | (4,678) | (4,841) | (13,903) | (13,700) | |||||||||||||||||||||||||||||||||||||||||||
| Legal settlements | (4,071) | — | (3,535) | — | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring benefits (costs) | (52) | 237 | (25,241) | 1,705 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP cost of goods sold | $ | 300,813 | $ | 275,348 | $ | 907,437 | $ | 766,125 | |||||||||||||||||||||||||||||||||||||||
| GAAP gross profit | $ | 437,435 | 58.6% | $ | 367,311 | 56.7% | $ | 1,239,660 | 56.6% | $ | 977,667 | 55.7% | |||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 4,678 | 4,841 | 13,903 | 13,700 | |||||||||||||||||||||||||||||||||||||||||||
| Legal settlements | (27,772) | — | (28,308) | — | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring (benefits) costs | 52 | (237) | 25,241 | (1,705) | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP gross profit | $ | 414,393 | 57.9% | $ | 371,915 | 57.5% | $ | 1,250,496 | 57.9% | $ | 989,662 | 56.4% | |||||||||||||||||||||||||||||||||||
10
| GAAP selling, general and administrative expense | $ | 216,150 | $ | 198,165 | $ | 655,428 | $ | 581,119 | |||||||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | (2,419) | (2,322) | (7,129) | (6,557) | |||||||||||||||||||||||||||||||||||||||||||
| Legal matters | (2,325) | (5,977) | (15,501) | (10,395) | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition related benefits (costs) (1) | — | (165) | 40 | 837 | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring benefits (costs) | 299 | 815 | (27,507) | (1,992) | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP selling, general and administrative expense | $ | 211,705 | $ | 190,516 | $ | 605,331 | $ | 563,012 | |||||||||||||||||||||||||||||||||||||||
| GAAP research and development expense | $ | 64,481 | $ | 59,546 | $ | 201,784 | $ | 160,833 | |||||||||||||||||||||||||||||||||||||||
| Restructuring benefits (costs) | (262) | 59 | (15,051) | 1,114 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP research and development expense | $ | 64,219 | $ | 59,605 | $ | 186,733 | $ | 161,947 | |||||||||||||||||||||||||||||||||||||||
| GAAP income from operations | $ | 156,804 | 21.0% | $ | 109,600 | 16.9% | $ | 382,448 | 17.5% | $ | 235,715 | 13.4% | |||||||||||||||||||||||||||||||||||
| Legal settlements | (27,772) | — | (28,308) | — | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 7,097 | 7,163 | 21,032 | 20,257 | |||||||||||||||||||||||||||||||||||||||||||
| Legal matters | 2,325 | 5,977 | 15,501 | 10,395 | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition related (benefits) costs (1) | — | 165 | (40) | (837) | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring (benefits) costs | 15 | (1,111) | 67,799 | (827) | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP income from operations | $ | 138,469 | 19.4% | $ | 121,794 | 18.8% | $ | 458,432 | 21.2% | $ | 264,703 | 15.1% | |||||||||||||||||||||||||||||||||||
| GAAP change in fair market value of equity securities | $ | (4,868,659) | $ | (1,580,350) | $ | (7,078,753) | $ | (3,591,509) | |||||||||||||||||||||||||||||||||||||||
| Valuation (loss) gain on equity-owned securities | 4,868,659 | 1,580,350 | 7,078,753 | 3,591,509 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP change in fair market value of equity securities | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| GAAP other (income) expense, net | $ | 579 | $ | (1,015) | $ | (16,732) | $ | (21,517) | |||||||||||||||||||||||||||||||||||||||
| (Loss) gain on equity-method investments | (1,899) | (183) | (5,579) | (2,634) | |||||||||||||||||||||||||||||||||||||||||||
| Legal settlements | 311 | — | 311 | — | |||||||||||||||||||||||||||||||||||||||||||
| Other non-recurring items (3) | — | — | — | 11,680 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP other (income) expense, net | $ | (1,009) | $ | (1,198) | $ | (22,000) | $ | (12,471) | |||||||||||||||||||||||||||||||||||||||
11
| GAAP income before income taxes | $ | 5,022,226 | $ | 1,684,461 | $ | 7,476,204 | $ | 3,829,105 | |||||||||||||||||||||||||||||||||||||||
| Legal settlements | (28,083) | — | (28,619) | — | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 7,097 | 7,163 | 21,032 | 20,257 | |||||||||||||||||||||||||||||||||||||||||||
| Legal matters | 2,325 | 5,977 | 15,501 | 10,395 | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition related (benefits) costs (1) | — | 165 | (40) | (837) | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring (benefits) costs | 15 | (1,111) | 67,799 | (827) | |||||||||||||||||||||||||||||||||||||||||||
| Valuation loss (gain) on equity-owned securities | (4,868,659) | (1,580,350) | (7,078,753) | (3,591,509) | |||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on equity-method investments | 1,899 | 183 | 5,579 | 2,634 | |||||||||||||||||||||||||||||||||||||||||||
| Other non-recurring items (3) | — | — | — | (11,680) | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP income before income taxes | $ | 136,820 | $ | 116,488 | $ | 478,703 | $ | 257,538 | |||||||||||||||||||||||||||||||||||||||
| GAAP provision for income taxes | $ | (1,094,193) | $ | (369,637) | $ | (1,656,643) | $ | (861,940) | |||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments (2) | 1,069,577 | 343,401 | 1,554,100 | 800,631 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP provision for income taxes | $ | (24,616) | $ | (26,236) | $ | (102,543) | $ | (61,309) | |||||||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 3,928,033 | 525.8% | $ | 1,314,824 | 203.1% | $ | 5,819,561 | 265.8% | $ | 2,967,165 | 169.0% | |||||||||||||||||||||||||||||||||||
| Legal settlements | (28,083) | — | (28,619) | — | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 7,097 | 7,163 | 21,032 | 20,257 | |||||||||||||||||||||||||||||||||||||||||||
| Legal matters | 2,325 | 5,977 | 15,501 | 10,395 | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition related (benefits) costs (1) | — | 165 | (40) | (837) | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring (benefits) costs | 15 | (1,111) | 67,799 | (827) | |||||||||||||||||||||||||||||||||||||||||||
| Valuation loss (gain) on equity-owned securities | (4,868,659) | (1,580,350) | (7,078,753) | (3,591,509) | |||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on equity-method investments | 1,899 | 183 | 5,579 | 2,634 | |||||||||||||||||||||||||||||||||||||||||||
| Other non-recurring items (3) | — | — | — | (11,680) | |||||||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments (2) | 1,069,577 | 343,401 | 1,554,100 | 800,631 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 112,204 | 15.7% | $ | 90,252 | 13.9% | $ | 376,160 | 17.4% | $ | 196,229 | 11.2% | |||||||||||||||||||||||||||||||||||
12
| GAAP diluted income per share | $ | 129.96 | $ | 43.64 | $ | 192.76 | $ | 98.46 | |||||||||||||||||||||||||||||||||||||||
| Legal settlements | (0.93) | — | (0.95) | — | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 0.23 | 0.24 | 0.70 | 0.67 | |||||||||||||||||||||||||||||||||||||||||||
| Legal matters | 0.08 | 0.20 | 0.51 | 0.34 | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition related (benefits) costs (1) | — | 0.01 | — | (0.03) | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring (benefits) costs | — | (0.04) | 2.25 | (0.03) | |||||||||||||||||||||||||||||||||||||||||||
| Valuation loss (gain) on equity-owned securities | (161.09) | (52.45) | (234.47) | (119.17) | |||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on equity-method investments | 0.06 | 0.01 | 0.18 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||
| Other non-recurring items (3) | — | — | — | (0.39) | |||||||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments (2) | 35.40 | 11.39 | 51.48 | 26.57 | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP diluted income per share | $ | 3.71 | $ | 3.00 | $ | 12.46 | $ | 6.51 | |||||||||||||||||||||||||||||||||||||||
| GAAP diluted weighted average shares used in per share calculation | 30,224 | 30,128 | 30,190 | 30,137 | |||||||||||||||||||||||||||||||||||||||||||
| Shares included in non-GAAP net income per share, but excluded from GAAP net loss per share as they would have been anti-dilutive | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP diluted weighted average shares used in per share calculation | 30,224 | 30,128 | 30,190 | 30,137 | |||||||||||||||||||||||||||||||||||||||||||
(1) Release of contingent consideration and other acquisition-related (benefits) expenses.
(2) Excluded items identified in the reconciliation schedule are tax effected by application of a non-GAAP effective tax rate. The non-GAAP tax provision is adjusted for items, the nature of which and/or tax jurisdiction requires the application of a specific tax rate or treatment.
(3) Gain on the sale of a division (2020).
2021 Financial Outlook
Forecasted non-GAAP operating margin excludes 96 basis points related to amortization of purchased intangibles. Forecasted non-GAAP operating margin does not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance, such as foreign currency fluctuations, future gains or losses associated with certain legal matters, acquisitions and restructuring activities.
13