Bio-Rad Laboratories Inc. BIO
Q2 2012 Earnings Call Transcript
Operator: Good day, ladies and gentlemen. Welcome to the Quarter Two 2012 Bio-Rad Laboratories Incorporated Earnings Conference Call. My name is Ben and I will be your operator for today. At this time, all the participants are in listen-only mode. We will conduct the question-and-answer session towards the end of this conference. As a reminder this call is being recorded for replay purposes.
I would now like to hand the call over to Mr. Christine Tsingos, Bio-Rad Laboratories Chief Financial Officer. Please proceed, ma'am.
Christine Tsingos - VP and CFO: Thank you. Good afternoon everyone, and thank you for joining us. Before we begin the call, I would like to caution everyone that we will be making forward-looking statements about management's goals, plans and expectations, because our actual results may differ materially from these plans and expectations, 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.
Today, we are pleased to report quarterly net sales of $510.4 million, a decrease of just over 2% on a reported basis versus the same period last year sales of $521.7 million. The strengthening of the dollar negatively impacted quarterly sales by more than $27 million. On a currency neutral basis year-over-year sales grew 3%.
During the quarter, we had good growth across many of our key diagnostic and life science markets, including $2.3 million of sales contributed by our new digital PCR products. Excluding currency and the addition of QuantaLife, organic sales growth was 2.6%. Overall, the quarterly top line growth was significantly impacted by the continued challenges in Europe, where sales declined year-over-year for both segments of our business.
The reported gross margins for the second quarter was a bit better than expected at 56.4% and is reflective of a favorable product mix, as well as increased manufacturing efficiencies, and despite an incremental $2.2 million of amortization expense related to the recent QuantaLife acquisition. For the quarter, the total non-cash purchase accounting expense recorded in cost of goods sold related to acquisitions was $6.7 million, which compares to $3.8 million in the second quarter of last year.
SG&A expenses for the quarter were $162.3 million or 31.8% of sales, which compares to 33.9% in the year ago period. The current quarter SG&A includes two significant one-time items that had the effect of lowering the reported expense and margin. The first item relates to the purchase consideration for QuantaLife.
You may recall that a portion of the consideration was in the form of an earn-out that is tied to sales goal. We are required to review the valuation of the purchase consideration for the earn-out every quarter. With sales running behind the stated goals, we reduced the value by $8.1 million, which is booked to SG&A.
The second one-time item that has benefited our margin in the second quarter was a reversal of approximately $5 million of bad debt reserves. During the quarter, Spain paid down the vast majority of its overdue receivables allowing us to recapture these reserves, and finally also recorded in SG&A is $3.1 million for amortization of intangibles related to acquisitions.
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