Bio-Rad Delivers Strong LS Results

Bio-Rad Laboratories Life Science (LS) recorded nearly double-digit quarterly sales growth due to a weak comparison in China and a strong backlog, which was bolstered by system-related challenges in the third quarter of 2015. LS first quarter sales climbed 6.4% to $165.9 million to account for 35% of revenue. Excluding currency, LS sales rose 9.8%, driven by demand for Droplet Digital-PCR products and process chromatography media. Higher sales of amplification and Western blotting products also contributed. LS sales were strongest in North America, Western Europe and China. Eastern European sales declined. Despite stronger sales volume, LS gross margin fell 390 basis points due to product mix. Reported operating loss widened 37.5% to $3.3 million because of lower gross margins, and increased R&D in digital PCR and cell biology projects.

Instrument Sales Lift Bio-Techne

For the fiscal third quarter ending March 31, revenue for Bio-Techne’s Biotechnology segment climbed 6% organically. Sales were driven by high single-digit growth for antibodies, including 20% growth for the Novus Biologicals brand, which continues to benefit from the company’s updated website. US sales grew 10% organically, including biopharmaceutical sales growth in the mid-teens and academic sales growth in the low single digits. Organic sales in China grew in the 25% range. However, Pacific Rim sales fell in the upper single digits due to a sharp decline in Japan. Despite low single-digit biopharmaceutical sales growth, European sales were flat organically due to the Easter holiday, which negatively impacted revenue growth by 3%. Biotechnology adjusted operating margin contracted 130 basis points to 55.5% due to increased investments.

Fiscal third quarter sales for Bio-Techne’s Protein Platforms segment jumped 26%, including double-digit revenue growth across most major regions and product lines. The company reported strong demand for its Simple Western and Simple Plex product lines. Initial uptake of the imaging capillary electrophoresis system, Maurice, also contributed to growth. Adjusted operating profit for the segment was $1.6 million compared to a loss of $1.7 million. The company expects similar segment growth in the fiscal fourth quarter.

Danaher Growth Slows on Comparisons

First quarter sales for Danaher’s Life Sciences & Diagnostics segment advanced 2.5% organically to account for 45% of company revenues. Organic life science sales grew in the low single digits, including less than 1% from price improvements. Growth was driven by MS sales as well as demand for flow cytometry, life sciences automation and centrifugation systems. As such, SCIEX sales grew in the low single digits organically, including strength in China and the Middle East, as well as in certain applied markets. Service revenue further contributed to SCIEX revenue growth. Leica Microsystems sales expanded in the low single digits organically, as higher demand in the US and China was partially offset by weakness in Japan and Latin America.

Danaher’s Environmental segment sales grew 3.5% organically to make up 16% of revenues. Pricing contributed roughly 1% to sales growth. Sales for the segment’s water quality platforms grew only slightly higher due to one fewer selling day and a strong comparison. Hach sales, which were roughly flat organically, experienced healthy demand from US municipal markets. However, weak industrial markets as well as softness in China and Eastern Europe because of order delays and a strong comparison mostly offset growth.

High-End Demand Hurts FEI Growth

Soon-to-be acquired FEI (see IBO 5/31/16) reported first quarter sales ahead of analysts’ consensus. Nevertheless, organic sales contracted 1.8% to $228.6 million when excluding currency headwinds of 0.9% and acquisition growth of 6.2%. The decline was attributed to weak demand for high-resolution instruments from semiconductor and materials research customers. Industry and Science segment sales declined 2.7% and 0.8% to account for 53% and 47% of revenues, respectively. Gross margin slipped 76 basis points to 46.9% due to product mix and lower volume. Given the slighter gross margins and higher R&D expenses, adjusted operating margin contracted 307 basis points to 13.3%.

QIAGEN’s Margins Fall On Slow Growth

Even with flat first quarter revenue growth of $298.4 million, QIAGEN slightly exceeded analysts’ expectations due to strong demand in emerging markets and positive momentum for its GeneReader NGS systems, which targets the clinical research and diagnostics markets. However, currency headwinds and lower US HPV sales reduced revenue growth by 2% each. In addition, soft academic spending in Europe and weak demand from Applied customers further stalled top line growth. Organic sales advanced 1%, or 3% excluding US HPV sales. All figures below are organic. Consumables and other related revenue improved 1% to account for 88% of revenues. Instruments sales grew 6% to make up 12%, including more than 50 placements for the QIAsymphony.

Geographic sales below are on a currency-neutral basis. Sales from the top seven emerging markets grew 19% to account for 13% of sales. With growth in Latin America, total sales in the Americas grew 5% excluding HPV sales to account for 46% of revenues. Sales in Europe/Middle East/Africa (EMEA) advanced 7% to make up 34%. Asia-Pacific/Japan sales, which accounted for 20% of revenues, advanced 4%, including 10% growth in China, as well as strong contributions from Australia, Singapore and South Korea, but a double-digit decline in Japan.

QIAGEN’s Molecular Diagnostics sales climbed 6% excluding US HPV sales, driven by QIAsymphony placements and a 25% jump in QuantiFERON TB test sales. Personalized Healthcare sales expanded due to increased revenues from companion diagnostics projects. Global HPV test sales contracted 26% to account for 6% of sales.

Within the life sciences businesses, Applied Testing sales fell 5% organically due to a strong comparison, and lower demand in the Americas and EMEA regions. Nevertheless, the company maintained its single-digit 2016 sales growth forecast for the Applied business. As a result of lower spending in Europe, Academia sales were roughly flat organically. Pharma sales expanded 5% organically, led by higher instrument placements and strong demand in the EMEA region.

Total adjusted gross margin fell 354 basis points to 69.5% of sales because of weak sales volume and lower margins on diagnostic partnership revenue. Given the reduced margins, coupled with increased sales and marketing investments, adjusted operating income slumped nearly five percentage points to 17.9%. The company reaffirmed its 2016 organic sales growth outlook of 5%. Second quarter organic sales are expected to grow at a similar pace, including 2% headwinds from US HPV sales.

Shimadzu Gains Overseas

For the six months ending March 31, Shimadzu’s Analytical and Measuring Instrument (AMI) sales grew 3.6%, 6% excluding currency, to ¥110.8 billion ($935.9 million = ¥118.38 = $1) to make up 61% of revenues. Accounting for 64% of AMI revenue, General Analytical Instruments sales rose 6.2%, including 5.7% growth for combined LC, GC and MS products. Testing Machines and Non-Destructive Inspection Machines revenue grew 4.9% to make up 10%. Conversely, Surface Analyzers and Environmental Monitors sales declined 3.8% and 1.5%, respectively, to each account for 5% of AMI revenues. Geographically, organic sales in India were particularly strong, and sales in Europe and China each grew in the 11% range. Japanese sales improved 3%, while sales in North America contracted roughly 10%. AMI operating margin expanded 170 basis points to 17.0%.

Full-year AMI sales grew 8.2%, 7% organically, to ¥208.4 billion ($1.74 billion = ¥120.08 = $1) to represent 61% of total revenues. Growth was driven by chromatography and MS sales, which advanced 11.5% to make up 52% of AMI revenue. Japanese sales, which grew 4% to account for 42% of AMI revenues, were led by sales of LC and GC to pharmaceutical and chemical markets.

All sales figures below exclude currency. Accounting for 11% of AMI revenue, North American sales were roughly flat, but experienced strength from health care markets for LC and MS. European sales grew 10% due to demand for LC from pharmaceutical and food customers. Sales in China grew in the upper single digits, led by demand for LC, GC and MS from private pharmaceutical companies, while government funding boosted chromatography sales for food applications. Pharmaceutical sales were particularly strong in India, for which sales grew in the 25% range to account for 4% of AMI revenue. Demand for LC and MS were healthy in Southeast Asia due to government stimulus measures. Full-year AMI operating margin climbed 190 basis points to 15.8%. For the fiscal year ending March 31, 2017, AMI sales are projected to grow 4.6% to ¥218.0 billion ($1.98 billion = ¥110.00 = $1). Operating margin is expected to slip 40 basis points to 15.4%.