管理層發言
Ladies and gentlemen, thank you for being here. My name is Desiree, and I will be your conference operator today. I would like to welcome everyone to the Bio-Rad Third Quarter 2025 Results Conference Call and webcast. I will now turn the conference over to Edward Chung, Head of Investor Relations. You may begin.
Good afternoon, everyone, and thank you for joining us. Today, we will review the third quarter 2025 financial results and provide an update on key business trends for Bio-Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer; Jon DiVincenzo, President and Chief Operating Officer; and Roop Lakkaraju, Executive Vice President and Chief Financial Officer. Before we begin our review, I would like to remind everyone that we'll be making forward-looking statements about management's goals, plans and expectations, our future financial performance and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans, goals and expectations. You should not place undue reliance on these forward-looking statements, and I encourage you to review our filings with the SEC, where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles. In addition to excluding certain atypical and non-reoccurring items, our non-GAAP financial measures exclude changes in the equity value of our stake in Sartorius AG in order to provide investors with a better understanding of Bio-Rad's underlying operational performance. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release. We have also posted a supplemental earnings presentation in the Investor Relations section of our website for your reference. With that, I'll now turn the call over to our Chief Operating Officer, Jon DiVincenzo.
Thank you, Ed, and good afternoon, everyone. Thank you for joining us today. We are pleased to share Bio-Rad's third quarter 2025 results, which reflects solid execution across our business. Revenue was consistent with our outlook and operating margin exceeded consensus, a testament to the discipline and agility of our teams in what continues to be a challenging and evolving macro environment. Our Clinical Diagnostics segment remains stable across our product areas, aside from the reimbursement rate headwind in China, which we expect to annualize in the fourth quarter. In our Life Science segment, process chromatography delivered a strong performance, helping offset the continued softness we're seeing in academic research and biotech funding. Many research customers continue to face uncertainty and are cautious with their budgets. This sentiment was reflected through continued weak instrument demand and some softness in consumables. However, through disciplined cost management and tight control of our discretionary spending, we achieved margin outperformance for the quarter. We also made meaningful progress advancing our Droplet Digital PCR strategy. During the quarter, we completed global sales training on our new QX platforms, and our teams are actively engaging customers. While it's still early, we are encouraged by the customer receptivity to the new products, particularly in the entry-level segment. Our sales funnel for these new systems is building nicely, but we recognize that selling cycles remain extended given the broader funding climate. We also continue to expand our ddPCR-based diagnostic strategy through two key partnerships, Gencurix and Biodesix. Gencurix made Bio-Rad the exclusive distributor of their Droplex oncology testing kits across Europe. This partnership leverages our strong commercial footprint in the region and helps accelerate the adoption of ddPCR-based cancer tests. We also expanded our partnership with Biodesix to provide greater access to critical biomarker testing for advanced breast cancer. Biodesix is validating our ESR1 assay in its CLIA-accredited labs and offering testing services for its customers. Operationally, our teams continue to execute well, advancing our lean initiatives and maintaining cost discipline. In summary, we're pleased with the progress we're making, balancing near-term execution with continued investment in innovation and long-term growth. And with that, I'll turn the call over to Roop, who will take you through our financial results in more detail.
Thank you, Jon, and good afternoon. I'd like to start with a review of the third quarter 2025 results. Net sales for the third quarter of 2025 were approximately $653 million, which represents a 0.5% increase on a reported basis versus $650 million in Q3 of 2024. On a currency-neutral basis, this represents a 1.7% year-over-year decrease and was driven by both our Life Science and Clinical Diagnostics segments. Sales of the Life Science segment in the third quarter of 2025 were $262 million compared to $261 million in Q3 of 2024, essentially flat on a reported basis and a 1.5% decrease on a currency-neutral basis, driven by the constrained academic research and biotech funding environment. Currency-neutral sales decreased in the Americas, partially offset by increased sales in Asia Pacific and EMEA. Within the Life Science segment, our process chromatography business experienced strong double-digit growth on a year-over-year basis due to the timing of customer orders within the quarter. As a result, we expect fourth quarter process chromatography revenue to be lower sequentially and on a year-over-year basis. For the full year 2025, we expect high teens growth for this product area versus our prior low double-digit growth outlook. Excluding process chromatography sales, our core Life Science segment revenue decreased 6% year-over-year and 7.8% on a currency-neutral basis. The softer Q3 performance reflects ongoing softness in the academic research in biotech end markets as well as the tough comparison due to large one-time orders in the year-ago period. Sales of the Clinical Diagnostics segment in the third quarter of 2025 were approximately $391 million compared to $389 million in Q3 of 2024, an increase of 0.6% on a reported basis and a decrease of 1.8% on a currency-neutral basis. The decrease is primarily because of the previously discussed lower reimbursement rates for diabetes testing in China. On a geographic basis, currency-neutral sales decreased in Asia Pacific, partially offset by increased sales in the Americas and EMEA. Q3 reported GAAP gross margin was 52.6% as compared to 54.8% in the third quarter of 2024. On a non-GAAP basis, third quarter gross margin was 53.5% versus 55.6% in the year-ago period. The decrease in gross margin was due to higher material costs and reduced fixed manufacturing absorption. SG&A expense for the third quarter of 2025 was $207 million or 31.7% of sales compared to $200 million or 30.8% in Q3 of 2024. Third quarter non-GAAP SG&A spend was $202 million versus $197 million in the year-ago period. The year-over-year increase in SG&A expense was due to higher employee-related costs. Research and development expense in the third quarter of 2025 was $71 million or 10.9% of sales compared to $91 million or 14% of sales in Q3 of 2024. Third quarter non-GAAP R&D spend was $70 million versus $91 million in the year-ago period. The lower year-over-year R&D was primarily due to higher in-process R&D charges associated with an acquisition in the third quarter of 2024. Q3 operating income of approximately $65 million or 10% of sales was flat versus Q3 of 2024 on both a dollar and percentage basis. On a non-GAAP basis, third quarter operating margin was 11.8% compared to 11.3% in Q3 of 2024, reflecting proactive cost actions we've taken in managing the business and net reductions in IP R&D expense. The change in fair market value of equity security holdings and loan receivables primarily related to the ownership of Sartorius AG shares contributed $398 million to our reported net loss of $342 million or $12.70 per diluted share. Non-GAAP net income, which excludes the impact of the change in equity value of the Sartorius shares was $61 million or $2.26 diluted earnings per share for the third quarter of 2025 versus $56 million or $2.02 diluted earnings per share for Q3 of 2024. Moving to cash flow. For the third quarter of 2025, net cash generated from operating activities was $121 million compared to $164 million for Q3 of 2024. Net capital expenditures for the third quarter were $32 million and depreciation and amortization for the third quarter of 2024 was $44 million. Free cash flow for the third quarter was $89 million, which compares to $123 million in Q3 of 2024. For the first nine months of 2025, we generated free cash flow of $256 million, resulting in a year-to-date free cash flow to non-GAAP net income conversion ratio of 126%. We remain on track to deliver full-year free cash flow of approximately $310 million to $330 million for 2025. During the third quarter, we purchased 212,578 shares of our stock for a total cost of $53 million or an average purchase price of approximately $249 per share. Year-to-date, we have retired 1.2 million shares through our buyback program, at a total cost of approximately $296 million. We will continue to be opportunistic with share repurchases and still have approximately $285 million available for additional buybacks under the current Board authorized program. Moving on to the non-GAAP guidance for 2025. We are maintaining our 2025 full-year outlook with total currency-neutral revenue growth to be in the range of flat to 1%. Our full-year 2025 non-GAAP gross and operating margin outlook also remains unchanged at 53.5% to 54.5% and 12% to 13%, respectively. While we don't provide quarterly guidance, we are offering some commentary to help frame what we're seeing in the current operating environment. On the Life Science side of our business, we continue to anticipate a modest revenue improvement in the fourth quarter. We do not expect any budget flush as research customers remain cautious with spending due to the uncertainties surrounding the final NIH budget and the U.S. government shutdown. While it's encouraging to potentially have a relatively flat NIH budget for next year, we remain cautious on the pace of recovery for the academic segment heading into 2026. We continue to believe it will take some time for researchers to regain confidence in the longer-term funding outlook. Additionally, we continue to anticipate a gradual improvement with biotech customers. With respect to our Diagnostics segment, we expect to return to growth in the fourth quarter with the China reimbursement headwind annualizing as well as the expected timing of revenue from our quality controls portfolio. While we aren't currently anticipating additional reimbursement challenges in China heading into 2026, we continue to see a soft macro environment in that region, which could dampen demand for our clinical Diagnostics products. On margins, we continue to anticipate a slight step-up in the fourth quarter gross margin, primarily driven by the mix of revenue. Combined with our continued focus on effective cost management, we expect operating margins to improve sequentially by at least 80 basis points. That concludes our prepared remarks. We will now open the line to take your questions.
分析師問答
Our first question comes from Patrick Donnelly with Citigroup.
Maybe one for you, just given those last comments there. Can you talk about the expectations for Q4? Obviously, you have the government shutdown, as you touched on. You have some of the process chromatography pull forward or bolus of strength there in the last couple of quarters. Maybe just talk about the ramp into Q4, the assumptions there would be helpful.
Yes, absolutely. So I think from both Life Sciences and Diagnostics have a slight uptick on both sides of the business. So that's nice to see. I think from a Life Science standpoint, obviously, as we talked about, we've got process chromatography gives us a little bit of a headwind in the fourth quarter. With that taken into account, obviously, we've got some strength in ddPCR that we're expecting in that fourth quarter. So that helps lift that a little bit. In the diagnostics side, it really is about the quality controls area that we've spoken about in past quarters. We still expect to see that jump up based on those lot leases, and we're still driving towards that. So that's kind of the trajectory and how we see the fourth quarter unfolding.
And maybe I can just add, this is Jon DiVincenzo. We're almost done here with October, and it seems like our demand was on plan. So we feel pretty good about that. It's something we're monitoring very closely. There is a little bit of ramp here. But between Clinical Diagnostics and Life Sciences, they're off to a pretty good start this quarter.
Yes. Understood. Okay. And then I know it's preliminary, but obviously, everyone's kind of framing up '26 to a degree. Any initial thoughts there, guys, as you look into year-end, maybe even if it's just higher-level moving pieces. You talked about China diagnostics, academic government, how are you thinking about the market in '26 and any moving pieces we should be thinking about on the revenue side?
Yes. I think that's why I tried to frame a little bit of those comments towards the end of the guidance section of my prepared comments, Patrick. I think academic here in the U.S. is still cautious. And so it's TBD a little bit with how the NIH budget comes out and kind of the ramp into '26 and how researchers really spend money into '26. I think the good thing is instruments are the ones that have been most greatly affected. Consumables have still been kind of chugging along. I think throughout the rest of the globe, China continues to be an open question. From our standpoint, we've talked about no VBP historically. DRG is something we've mentioned previously, which is a little bit of an impact, but not a significant impact. And then when we think about biotech, we kind of look at biotech as something that slowly, gradually improves as we get into '26. And then process chromatography, obviously, we've had a very strong year this year in '25. Part of that, quite honestly, is an easy compare to '24. Part of it is getting back to a little bit more normalization, I think. As we think about it longer term, I think we've said this to all of you in the past, we expect that to be kind of a high single-digit sort of growth rate, and we still think that, that's reasonable for '26 based on what we see. But again, we're still going through our planning cycle. We will give obviously specific 2026 guidance in our February call. But at least that's some framing comments for you all.
That's really helpful, Roop. I appreciate that. And maybe last one, just the ddPCR side, it sounds like, again, process chromatography you're feeling better about. Maybe just talk about digital PCR, what the market looks like and just thoughts going forward into next year on that piece.
Yes, this is Jon DiVincenzo again. We feel very good. Our commercial team is very, very excited. We expanded the commercial effort we have on that side. We have good reception overall of the new products, and we're expanding our assays. And as we move forward with these partnerships, we expect a little upside there on the diagnostics portion of the marketplace. So very positive overall feeling from our teams and from customers.
I think with all the positive sentiment, to build on Jon's comment, I think it'd be great to get some of the instruments flowing through from a broader market standpoint and not being as soft as it's been. And so we're excited about all of the pipeline development and everything else.
There are no further questions at this time. I would like to turn the call back over to Edward Chung for closing remarks.
Thank you for joining today's call. As always, we appreciate your interest, and we look forward to connecting soon. All right. Take care.
Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.