Bio-Rad Reports Record Fourth-Quarter and Full-Year 2010 Financial Results
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Bio-Rad Laboratories, Inc., a multinational manufacturer and distributor of life science research and clinical diagnostic products, has announced financial results for the fourth quarter and fiscal year ended December 31, 2010.
Fourth-quarter reported revenues were $533.7 million, up 7.8% compared to $495.1 million reported for the fourth quarter of 2009. On a currency-neutral basis, quarterly revenues increased 9.9% compared to the same period last year.
This increase was the result of organic growth across Bio-Rad's two main areas, Life Science and Clinical Diagnostics as well as revenue of $15.3 million resulting from the acquisition of certain diagnostics businesses of Biotest AG, which were added to the Company's portfolio in the first quarter of 2010.
Excluding the revenue from the Biotest acquisition, fourth-quarter revenues were up 6.7% on a currency neutral basis. Fourth-quarter gross margin increased to 56.2% compared to 54.2% during the same quarter last year.
Net income attributable to Bio-Rad for the fourth quarter of 2010 was $67.9 million, or $2.41 per share on a fully diluted basis compared to $1.35 per share, during the same period last year. In December, the Company refinanced a portion of its long-term debt issuing $425 million of senior debt.
Proceeds were used to retire $200 million of subordinated debt in December and, subsequent to year end, $225 million of subordinated debt. The effect of this transaction on pretax earnings for the fourth quarter of 2010 was $5.3 million, which is included in interest expense.
The tax provision for the fourth quarter was a benefit of $10.7 million. This extraordinary fourth-quarter provision benefit includes the repatriation of foreign earnings to the U.S. and the favorable impact of the extension of the U.S. Research and Experimentation tax credit. Without these two items, the fourth-quarter effective tax rate would have been approximately 25%.
For the full year, sales grew by 8.0% to $1,927.1 million compared to $1,784.2 million in 2009. Year over year, there was insignificant currency impact on sales growth. Full-year net income attributable to Bio-Rad was $185.5 million, or $6.59 per share on a fully diluted basis, compared to $144.6 million, or $5.20 per share, respectively, in 2009. Full-year gross margin increased to 56.6% compared to last year's figure of 56.0%.
"We are pleased by our performance during the fourth quarter and the entire year," said Norman Schwartz, Bio-Rad President and Chief Executive Officer. "In spite of a cautious business environment in the U.S. and Europe throughout 2010, we are encouraged by customer acceptance of several new products including our TC10™ automated cell counter and our IH-1000 automated blood typing platform. Although continued economic pressure from European markets is predicted, we expect 2011 to be another year of progress for Bio-Rad."
The Life Science segment net sales for the fourth quarter were $192.9 million, up 1.0% compared to the same period last year. On a currency-neutral basis, Life Science segment sales increased by 2.2%. Full-year reported revenues for the Life Science segment were $648.1 million, up 2.6% over the prior year, or an increase of 2.2% on a currency-neutral basis. European sales continued to lag in the fourth quarter as a result of weak economic conditions facing government-funded research. During the quarter, the Life Science segment benefited from sales of precast electrophoresis gels as well as its next generation PCR instruments, in particular, the CFX96™ real-time PCR detection system.
The TC10 automated cell counter also continued to gain rapid customer acceptance on a global basis. In November, Bio-Rad launched the Criterion® TGX Stain-Free™ precast electrophoresis gels which, when combined with Bio-Rad's Gel Doc™ EZ imager, provide researchers with the fastest protein separation and visualization available.
The Clinical Diagnostics segment reported net sales of $336.5 million for the fourth quarter, up 12.0% compared to the same period in 2009. On a currency-neutral basis, net sales were up 14.7%. These results include additional revenue of $15.3 million from the diagnostics businesses of Biotest AG that were added to the Company's portfolio in the first quarter of 2010. Excluding revenue from the Biotest acquisition, net sales were up 9.3% on a currency-neutral basis compared to the same quarter last year. Full-year reported revenues for the Clinical Diagnostics segment were $1,265.3 million, an increase of 11.0% over the prior year. On a currency-neutral basis, full-year sales increased 11.3% compared to 2009 results. Excluding revenue from the Biotest acquisition, full-year sales increased 6.3% on a currency neutral basis. Performance in the Clinical Diagnostics segment during the fourth quarter was the result of growth across all product lines, most notably quality controls, blood typing, diabetes monitoring, as well as sales of the BioPlex 2200® system. During the fourth quarter, the Company announced FDA clearance and the U.S. launch of Bio-Rad's BioPlex® 2200 Anti-CCP test for the early detection of rheumatoid arthritis. This novel marker has been shown to have superior diagnostic specificity.
2010 Full-Year Highlights
- Full-year Company sales grew by 8.0% to $1,927.1 million.
- Year-over-year net income was $185.5 million, or $6.59 per share on a fully diluted basis, compared to $144.6 million, or $5.20 per share in 2009.
- In January, Bio-Rad completed the purchase of certain diagnostics businesses of Biotest AG including its diagnostics products in the areas of blood transfusion testing, transplantation, and infectious diseases.
- Also, in January, Bio-Rad announced the launch of a new Anti-CCP test for markets outside the U.S. for its BioPlex 2200 system for the early detection of rheumatoid arthritis. After receiving FDA clearance later in the year, the product was launched in the U.S.
- In March, Bio-Rad announced the launch of the Mini-PROTEAN® TGX™ precast gels that provide researchers with the fastest running, long shelf life precast gels for protein electrophoresis.
- In May, Bio-Rad introduced the TC10 automated cell counter, which accurately and reproducibly provides total mammalian cell counts in 30 seconds, eliminating the need for manually counting cells.
- Also in May, the Clinical Diagnostics segment announced the launch of the BioPlex® 2200 MMRV IgG kit (measles, mumps, rubella, and the varicella-zoster virus) for use on the company's BioPlex 2200 system.
- During the second quarter, Bio-Rad received notification from the FDA that it could proceed with an Investigational New Drug Study for its Dengue NS1 Ag microplate assay.
- In June, Bio-Rad announced the launch of its IH-1000 blood screening system for markets outside the U.S.
- In July, Bio-Rad submitted Premarket Approval application to the FDA for its fourth-generation HIV assay, the GS HIV Combo Ag/Ab EIA (enzyme immunoassay), offering early detection of HIV infections as well as acute HIV infections.
- In September, Bio-Rad announced the launch of the Gel Doc EZ imager, the first gel documentation system that provides publication-quality images and analysis in seconds.
- In November, the Life Science segment launched Criterion TGX Stain-Free precast gels which, when combined with Bio-Rad's Gel Doc EZ imager, provide researchers with the fastest protein separation and visualization available.
- In December, Bio-Rad successfully issued $425 million of senior debt. As a result of that transaction, the Company redeemed $200 million of subordinated debt originally due in 2014. Subsequently, in January 2011, the Company redeemed $225 million of subordinated debt originally due 2013.
Internal Control Over Financial Reporting
In connection with our audit committee's ongoing investigation of our compliance with the FCPA, our management identified three significant deficiencies in our internal control over financial reporting as of December 31, 2010 that, when considered and taken together, constitute a material weakness in our internal control over financial reporting as of December 31, 2010. Our conclusion that we have a material weakness in our internal control over financial reporting as of December 31, 2010 is not based on quantified misstatements in our historical financial statements or our financial statements as of and for our fiscal quarter and year ended December 31, 2010, but instead on the risk that we may be unable to prevent or detect on a timely basis potential material errors in our future financial statements.
We do not presently anticipate that the material weakness in our internal control over financial reporting as of December 31, 2010 will have any material effect on our previously reported financial results or our financial results for our fiscal quarter or year ended December 31, 2010. Our Annual Report on Form 10-K for our fiscal year ended December 31, 2010 will contain more information about these three significant deficiencies and the resulting material weakness and the measures that we have initiated and are considering initiating to attempt to remediate it.
Management will discuss these results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) February 24, 2011. Interested parties may access the call by dialing 866-202-0886 (in the U.S.) or 617-213-8841 (international), access number 25027707.