Bio-Rad Laboratories, Inc. Q1 FY2025 earnings call

Key Points - Despite a challenging macro-environment, Bio-Rad delivered solid Q1 results, exceeding consensus for revenue and operating margins. - Clinical Diagnostics performed slightly better than forecast, while Life Science had softness in academia and biopharma research, but bioproduction showed positive momentum with Process Chromatography returning to growth. - Launched key menu expansions for core life science portfolio, including a new PCR-based salmonella test and advancements to ddPCR Vericheck assays. - Acquisition of Stilla Technologies remains on track for closing by end of third quarter, expanding digital PCR offering. - Visited global teams across three continents, reinforcing confidence in team commitment and customer relationships. - Investments in efficiency and productivity yielding tangible results, including renewal of immunohematology platform contract with German Red Cross Blood donation service.

The Life Science Group had sales of $229 million in Q1 2025, a 5.4% decline from $242 million in Q1 2024, driven by softness in biotech and academic research, particularly in the Americas. Excluding Process Chromatography, Core Life Science Group revenue decreased 7.5% year-over-year. The Clinical Diagnostics Group had sales of $357 million in Q1 2025, a 3.2% decline from $369 million in Q1 2024, with increased demand for quality control products offset by lower diabetes testing revenue. Process Chromatography experienced mid-teens year-over-year growth and is expected to have high single-digit growth in 2025.

Guidance - Updated 2025 full-year guide reflects Q1 results, academic/biotech funding state, and macroeconomic impacts. - Expected total currency-neutral revenue in range of approximately 1% decline to 1.5% growth. - Life Science business now expected to be flat-to-down 3% for full year, down from previous growth forecast. - Diagnostics growth outlook derisked by ~100 basis points to 0.5%-2.5% full-year growth. - Tariff impact results in 130 basis points headwind to operating margin, with actions taken to mitigate effects. - Full-year non-GAAP gross margin projected 53%-54.5%, operating margin 10%-12%. - Target full-year free cash flow of approximately $310 million to $330 million. - Updated tax rate estimate to ~22% for 2025 due to change in equity value of Sartorius investment.

Risks - Tariff impacts and global trade disruptions, including U.S.-manufactured products imported into China. - Macroeconomic uncertainties, including academic funding cuts and softness in biotech customer spending. - Geopolitical and trade tensions creating fluid and uncertain environment for business operations.

Q: Patrick Donnelly from Citigroup asked about tariffs, academic funding, and the gap between consumables and equipment.

A: Roop Lakkaraju discussed tariff mitigation efforts and academic funding softness, while Jon DiVincenzo noted consumables held up better than instruments.

Q: Dan Leonard from UBS asked about tariff exposure and growth gap between consumables and equipment.

A: Roop Lakkaraju explained tariff sources and impact, and Jon DiVincenzo clarified the gap with consumables holding up and instruments softening.

Q: Brandon Couillard from Wells Fargo asked about guide derisking and Stilla acquisition.

A: Roop Lakkaraju discussed guide derisking and Norman Schwartz talked about Stilla acquisition excitement.

Q: Unidentified Analyst from Jefferies asked about Biopharma Group trends and China reimbursement.

A: Jon DiVincenzo and Norman Schwartz discussed biopharma trends and China reimbursement playing out as expected.

Q: Conor McNamara from RBC Capital Markets asked about life science dynamics and China diagnostics.

A: Norman Schwartz and Jon DiVincenzo discussed life science dynamics and China diagnostics impact.

Q: Jack Meehan from Nephron Research asked about tariff assumptions and free cash flow.

A: Roop Lakkaraju explained tariff assumptions and free cash flow levers like working capital management.