Bio-Rad Laboratories, Inc. (BIO - Free Report) reported second-quarter 2017 earnings of 17 cents per share, a huge decline from the year-ago earnings of 61 cents. The quarter’s figure also missed the Zacks Consensus Estimate of 63 cents by a wide margin.
Notably, net income in the second quarter was hit by lower sales, weaker gross profit, increased acquisition-related expenditures for new products and technology plus higher expense for implementation of new systems and operations in Europe.
Net sales in the quarter came in at $504.7 million, down 2.3% year over year (down 1.6% at constant exchange rate or CER). Sales also missed the Zacks Consensus Estimate of $515 million by 1.9%. The year-over-year fall in sales was largely due to a slowdown in productivity related to the recent go-live of the company’s global ERP system in Western Europe as well as a shift in sales into the first quarter in anticipation of the ERP deployment.
Quarter in Detail
On a segmental basis, the Life Science segment’s net sales came in at $179.4 million, down 0.3% year over year (up 0.3% at CER). At CER, sales rose on the back of strong sales of Droplet Digital PCR (ddPCR) instruments and reagents, offset by a decrease in process chromatography media sales, plus some of the ERP-related disruption.
Within Clinical Diagnostics, the company registered sales of $322.1 million, down 3.5% year over year (down 2.7% at CER). This decline resulted from a significant slowdown of European sales, especially in infectious disease and immunohematology products, directly related to the disruptions post go-live of the new ERP system.
Gross margin of 54.1% during the second quarter was down 7 basis points (bps) year over year on a 2.5% decline in gross profits. Adjusted operating loss in the reported quarter was $2.35 million compared with the operating profit of $24.9 million in the year-ago quarter.
The company exited the second quarter with cash and cash equivalents and short-term investments of 717.4 million compared with $844 million at the end of 2016. Year to date, net cash provided by operating activities was $6.2 million compared with $69.7 million in the year-ago period.
2017 Guidance
Despite a dismal second-quarter performance, Bio-Rad continues to expect organic sales growth of approximately 4% at CER for the full year. This growth rate assumes recovery of a substantial portion of the $15-$17 million of ERP-related sales disruption that took place in the second quarter.
With lower-than-anticipated operating profit in the first half of 2017 and including the addition of RainDance Technologies, the company has lowered its currency-neutral operating margin projection for the full year to a range of 6--6.5% from the earlier guidance of 7%.
Bottom Line
Bio-Rad posted a disappointing quarterly show with both earnings and sales significantly lagging the Zacks Consensus Estimate. Sales growth was majorly hampered by a slower productivity resulting from ERP deployment in Western Europe as well as lower-than-expected sales in the process media business. However, the company reiterated its organic growth expectation indicating chances of recovery.
Zacks Rank & Key Picks
Bio-Rad has a Zacks Rank #3 (Hold). A few better-ranked medical stocks worth considering are Edwards Lifesciences Corporation (EW - Free Report) , INSYS Therapeutics, Inc. and Align Technology, Inc. (ALGN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 5.9% over the last three months.
INSYS Therapeutics has a long-term expected earnings growth rate of 20%. The stock delivered a stellar four-quarter average earnings surprise of 60.7%.
Align Technology has expected long-term adjusted earnings growth of almost 26.6%. The stock has rallied roughly 25.9% over the last three months.
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Bio-Rad Laboratories, Inc. (BIO - Free Report) reported second-quarter 2017 earnings of 17 cents per share, a huge decline from the year-ago earnings of 61 cents. The quarter’s figure also missed the Zacks Consensus Estimate of 63 cents by a wide margin.
Notably, net income in the second quarter was hit by lower sales, weaker gross profit, increased acquisition-related expenditures for new products and technology plus higher expense for implementation of new systems and operations in Europe.
Net sales in the quarter came in at $504.7 million, down 2.3% year over year (down 1.6% at constant exchange rate or CER). Sales also missed the Zacks Consensus Estimate of $515 million by 1.9%. The year-over-year fall in sales was largely due to a slowdown in productivity related to the recent go-live of the company’s global ERP system in Western Europe as well as a shift in sales into the first quarter in anticipation of the ERP deployment.
Quarter in Detail
On a segmental basis, the Life Science segment’s net sales came in at $179.4 million, down 0.3% year over year (up 0.3% at CER). At CER, sales rose on the back of strong sales of Droplet Digital PCR (ddPCR) instruments and reagents, offset by a decrease in process chromatography media sales, plus some of the ERP-related disruption.
Within Clinical Diagnostics, the company registered sales of $322.1 million, down 3.5% year over year (down 2.7% at CER). This decline resulted from a significant slowdown of European sales, especially in infectious disease and immunohematology products, directly related to the disruptions post go-live of the new ERP system.
Gross margin of 54.1% during the second quarter was down 7 basis points (bps) year over year on a 2.5% decline in gross profits. Adjusted operating loss in the reported quarter was $2.35 million compared with the operating profit of $24.9 million in the year-ago quarter.
The company exited the second quarter with cash and cash equivalents and short-term investments of 717.4 million compared with $844 million at the end of 2016. Year to date, net cash provided by operating activities was $6.2 million compared with $69.7 million in the year-ago period.
2017 Guidance
Despite a dismal second-quarter performance, Bio-Rad continues to expect organic sales growth of approximately 4% at CER for the full year. This growth rate assumes recovery of a substantial portion of the $15-$17 million of ERP-related sales disruption that took place in the second quarter.
With lower-than-anticipated operating profit in the first half of 2017 and including the addition of RainDance Technologies, the company has lowered its currency-neutral operating margin projection for the full year to a range of 6--6.5% from the earlier guidance of 7%.
Bottom Line
Bio-Rad posted a disappointing quarterly show with both earnings and sales significantly lagging the Zacks Consensus Estimate. Sales growth was majorly hampered by a slower productivity resulting from ERP deployment in Western Europe as well as lower-than-expected sales in the process media business. However, the company reiterated its organic growth expectation indicating chances of recovery.
Zacks Rank & Key Picks
Bio-Rad has a Zacks Rank #3 (Hold). A few better-ranked medical stocks worth considering are Edwards Lifesciences Corporation (EW - Free Report) , INSYS Therapeutics, Inc. and Align Technology, Inc. (ALGN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 5.9% over the last three months.
INSYS Therapeutics has a long-term expected earnings growth rate of 20%. The stock delivered a stellar four-quarter average earnings surprise of 60.7%.
Align Technology has expected long-term adjusted earnings growth of almost 26.6%. The stock has rallied roughly 25.9% over the last three months.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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