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Bio-Rad's Q2 Revenues Slip 2 Percent on Softness in Europe, Strengthening Dollar

NEW YORK (GenomeWeb News) – Bio-Rad Laboratories said after the close of the market on Tuesday that revenues in the second quarter were down 2 percent year over year, as the firm missed analysts' estimate on the top line.

For the three months ended June 30, the Hercules, Calif.-based company recorded revenues of $510.4 million, down from $521.7 million and below the consensus Wall Street estimate of $524.6 million.

On a currency-neutral basis, revenues increased 3 percent year over year. Bio-Rad CFO Christine Tsingos said on a conference call after the release of the firm's earnings that the strengthening of the dollar negatively impacted sales in the second quarter by more than $27 million.

Revenues for the Life Sciences segment dropped 4 percent year over year to $162.4 million. On a currency-neutral basis, segment sales were down almost 1 percent year over year. The company said sales in Asia-Pacific and Japan saw "solid growth," but North American and European sales were soft.

The Clinical Diagnostics segment saw sales down 1 percent year over year to $344.0 million. On a currency-neutral basis sales were up 5 percent. Many product lines, Bio-Rad said, produced sales growth during the quarter, including blood virus, quality controls, diabetes, and microbiology products, as well as the BioPlex 2200 system. Weakness in Europe was offset by growth in the emerging markets, Asia-Pacific, and Japan, the firm said.

Bio-Rad upped its R&D spending 9 percent to $52.3 million from $48.2 million a year ago but sliced 8 percent from SG&A spending to $162.3 million from $176.7 million a year ago.

The company recorded a profit of $48.3 million, or $1.69 per share, compared to a profit of $40.0 million, or $1.41 per share, a year ago. Excluding a one-time benefit associated with the QuantaLife purchase consideration adjustment of $8.1 million and a reversal of bad debt reserves of $5 million, the estimated EPS in the quarter was $1.26, Tsingos said on the conference call.

The consensus Wall Street EPS estimate was $1.19.

Tsingos added that QuantaLife contributed $2.3 million in sales during the second quarter and the global pipeline for Bio-Rad's digital PCR products is "sizeable and seems to indicate an acceleration of growth over the next several quarters," though she and other company officials acknowledged that the sales ramp has been slower than originally anticipated.

She attributed that to the fact that QuantaLife is a new technology and with current budget restraints faced by customers, "it's a longer sales cycle."

The company exited the quarter with $456.5 million in cash and cash equivalents and $378.8 million in short-term investments.

Bio-Rad President and CEO Norman Schwartz said in a statement, "Currency changes mask what was otherwise a decent result for the year so far, given the continued challenges of the global economy. While the economic outlook suggests more of the same for the remainder of the year, we continue to pursue opportunities on a number of fronts."

On the conference call, Schwartz said that on the M&A front, "There's always something going on, we have a couple of things that we're looking at right now," but did not elaborate.

Tsingos reiterated previous guidance of between 3.5 percent and 4.5 percent growth on the top line on a currency-neutral basis, but said that as a result of an expected continued soft European market, results likely will be at the bottom end of the range.

In early Wednesday trading on the New York Stock Exchange, shares of Bio-Rad were up nearly 4 percent at $101.73.

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