BIO-RAD LABORATORIES, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Jon DiVincenzo noted they met revised 2024 guidance for revenue and operating margin. Clinical diagnostics performed better than forecast, while life science was affected by biopharma softness. Gross margin expanded in 2024 via productivity improvements. Announced binding offer to acquire Stilla Technologies to complement digital PCR portfolio, expected to close by end of Q3 2025. Streamlined cost structure with 5% workforce reduction. Asia Pacific diagnostics declined due to China reimbursement change. Life science showed modest recovery, process chromatography sales improved in H2 2024. Droplet digital PCR portfolio had strong demand for reagents. Focus on operational and commercial excellence in 2025, with innovation including new product updates like refreshed chromatography platform and digital PCR system.

Segment Performance

• Fourth Quarter 2024: Net sales were ~$668 million, down 2% vs Q4 2023. Life Science Group sales: $275 million (-5.5% reported, -6% currency-neutral). Excluding process chromatography, core life science group revenue increased 2.5% Y/Y and 2% currency-neutral. Clinical Diagnostics Group sales: ~$393 million (+0.9% reported, +0.7% currency-neutral), driven by quality control and blood typing, offset by diabetes portfolio decline due to China reimbursement change. Q4 GAAP gross margin 51.2% vs 53.8% in Q4 2023.
• Full Year 2024: Net sales $2.557 billion, down 3.9% vs 2023. Life Science Group sales: ~$1.028 billion (-12.8% reported, -12.6% currency-neutral). Clinical Diagnostics Group sales: $1.538 billion (+3.3% reported, +3.7% currency-neutral). Full-year non-GAAP gross margin 55% vs 54.2% in 2023.

Guidance

• 2025 currency-neutral revenue growth: Life Science Group 1.5%-3.5%, Clinical Diagnostics Group 2%-3%. Non-GAAP gross margin 55%-55.5%, operating margin 13%-13.5%. Q1 revenue expected to be ~5.75%-7% lower Y/Y, then sequential improvement. CapEx projected $160M-$180M, free cash flow $310M-$330M. Includes ~60 basis point headwind from China diabetes reimbursement change and ~40 basis point headwind from Sabre Bio R&D expense.

Risks

• Softness in biopharma and academic markets. China reimbursement changes impacting diagnostics revenue. Uncertainties around NIH funding and its impact on academic research. Strengthening of the US dollar creating headwinds. One-time R&D expense from the Sabre Bio acquisition affecting results.

Q: On the life sciences guide, does DDPCR growth fall within the 1.5%-3.5% range and is the Stilla acquisition included?

A: DDPCR growth is more towards 1%-2%, and the Stilla acquisition isn't included in the range but could be additive if closed in 2025.

Q: Walk through the gross margin guide range?

A: Midpoint ~13.25%, with end market dependence (soft academia, biotech/biopharma still soft) affecting ability to reach higher or lower ends of the range.

Q: Process chromatography decline in Q4 and full year, and conviction in 2025 high single-digit growth?

A: Process chromatography declined significantly, but conviction in 2025 high single-digit growth is strong due to customer conversations and destocking efforts.

Q: Operating margin bridge for 2025?

A: Includes 60 basis points from China diagnostics, 40 basis points from dollar strength, and 40 basis points from Sabre Bio R&D expense, totaling ~140 basis points headwinds.

Q: First quarter forecast and segment breakdown?

A: Q1 revenue down 5%-7% Y/Y, with sequential downtick, influenced by soft academic and biotech/biopharma markets, FX headwinds, and full effect of donor screening and China reimbursement.

Q: China reimbursement impact and spread to other testing areas?

A: China reimbursement change affected diabetes portfolio, but no expectation of spreading to other testing areas currently.

Q: NIH exposure and customer buying patterns?

A: NIH funding uncertainty has researchers in wait-and-see mode, especially for capital equipment.

Q: DDPCR market progress and competition?

A: Competitive market, with Stilla acquisition allowing entry into new price points, and focus on technology investment and assay portfolio building.

Q: New product introductions contribution in 2025?

A: Not overly significant initially, but building towards 2026 and beyond.

Q: Capital allocation and buyback vs M&A?

A: Open to midsized/larger deals in addition to share buybacks.

Q: Pricing assumptions excluding China diagnostics dynamics?

A: Netting out China effect, pricing assumptions are around 1%-1.5%.