Luminex (LMNX) 4 Feb 192018 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Luminex Corporation’s Fourth Quarter and Full Year 2018 Earnings Conference Call. My name is Sonia and I’ll be your coordinator for today. Today's call is being recorded. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. Instructions]. [Operator like President call for and now Currie, to opening turn Vice Senior Chief to would over the Harriss remarks. I Financial Officer proceed. Please

afternoon, and operational to conference XXXX Luminex welcome results. and our financial financial fourth quarter Good call year full and to discuss Corporation's

Officer. call will financial call Executive the review we’ll for highlights, review me the our and and with our after open following the is Homi corporate be On President your questions. standard performance that, Shamir, up today Chief We’ll agenda. Homi I'll

statements. Securities our or based by statements to the on Section a are a unknown meaning and reminder, of beyond and differ the XX, beliefs course as quarterly on Relations those of our statements. with and and defined statements for you Also, that statements. some forward-looking speak control, differences maybe these adversely financial provided We as year-ended to are cause XXE Exchange and for measures Form to To filed consequently for Regulation the to on today’s presentation recorded these such with site are on our are Web could As Certain claims of be the may and current is Exchange Homi financial conference call company will Factors within directly Securities by comparable Litigation historical the uncertainties, over Private the and known Investor CEO, which detailed replay undertake or and of our extent These the six and reports of hereof today's risks or results December to non-GAAP Regulation only earnings from any in of forward-looking our covered forward-looking call reconciliation covered, company’s being statements Commission. update most are is that Reform G, the expectations call the section we XX-K forward-looking Shamir. I’ll and website. during of to GAAP Act available the President no of non-GAAP may available contribute measures that XX-Q our SEC will date protections not XXXX release, the subject documents accordance G. a certain the Securities encourage on actual turn now the included such the be to measures, which and obligation made materially in in the review Act plans financial this call. Form purely our months anticipated cause and be in could and be

XXXX Harriss. you, to Thank call. afternoon and quarter earnings welcome our fourth Good and full-year

our put are top achieved of our asset obtain and performance that high-value diversified diversified pleased of We businesses. We end of year extremely guidance to businesses the cash some revenue even the further. our with overall full to our use

double-digit. almost by of by losses Our performance solid we our was $XX by XXXX million Revenue the was when was several for adjust growth driven revenue, revenue This total up X% of factors. LabCorp financial but strong. approximately grew

quarter-over-quarter XX% grew stream both growth full in impressive the growth quarter. was unique that with was driven they success consumable fourth market double-digit secure technology. by revenue LTG as quarter. Our rise anticipate in as growth continue excess to fourth our for our partner by and a XX% royalties their X% consumable year with end-user the and in substantial surprise the extremely we This of year as target sales the None of for royalty full for

customers. of $XXX market million. model, partners the carry their leaders products by is of This our reported advantages allowing our In to our to fact, end-user primary approximately one sales totaled partnership

for adjusted Our sell our of LabCorp and actually for in XX% we continues MDx franchise from departure year. when grew quarter the grew come by for sample-to-answer by assay the overall, full but stream highlights The approximately XX% revenue to XX%. was up real million, revenue by it the $XX which X% revenue

We sample-to-answer system year. during contracted base of in the our growth approximately continue expanding units with XXX

As of a XXX,XXX, reminder, end XXX XX,XXX increased and three customer of years. year, a trial system and for assay, pipeline. was clinical system two our a increase respiratory At we in with the for full ARIES XX%. respectively, had active beginning of about or requirement respiratory the clinical sample-to-answer made started almost this use contracted trial II enteric both usually minimum more panel We The per VERIGENE robust year-over-year panel a R&D XXXX panel. system customer is at is complete year. Utilization VERIGENE our the panel the of both the year. the begin first the to We progress contractual enteric the and with and and

Additionally, trail ARIES our we our on are wrapping form clinical system. MRCA

in longer-term be launch the capability launches is the additional be cytometry. commercial important take It assay And developed and product kits will and advantages early pipeline of new system will SENSIPLEX validate system. xMAP of able system partners previously LTG backwards for increased note of are plan and our should testing partner flow excited we these Our is next-generation MDx, enhancements approaching very and need to to ready about the by that offerings XXXX. with to updated kit sensitivity still coming xMAP that of our both the

diversifying take space, on science of with customer not our we to was established with happened marketplace. acquisition, acquisition that the have first differentiated of the of provide asset us our business day With one, sell products. to but This our closing last steadily will an flow development recognition of and who the this the the probably our flow adopted to complementary xMAP directly year growing cytometry brand be for cytometry quality technology, will able opportunity to further high MilliporeSigma. acquisition, last the life exciting research Another in

that product $XX while cytometry develop in base acquisition imaging add flow of our the a to should much of stream goals the XXXX our line and generate revenue component. We accretive million to by is this believe involving of recurring can content that approximately placement primary year-end. both revenue One top our a be larger support [Indiscernible] to be

integration in Finally, will a like my briefly to XXXX progress the both will in the launch revenue give SENSIPLEX the and us transitional years, toward for I and beyond. state continued would our those be of in that prepare years. addition, concentration flow and execute LabCorp VERIGENE XXXX. In year in we lays Luminex growth solid Accomplishing adjust XXXX. will intense had future growth we transition of for a for in growth discuss on both with the expectation extent product make of the recent for and of II foundation cytometry double-digit previously groundwork launch have XXXX in XXXX,

Now, Harriss will review detail. more financial our results in

Thanks, Homi.

strong quarter X% of mentioned, revenues, effects absent year Consolidated we LabCorp a excluding XX%, for quarter and and the Homi up the fourth had strong revenue departure. million, the the $XX.X quarter up LabCorp. for fourth As was

year, revenue was up X% X%, the For or excluding LabCorp.

quarter both double-digit was double-digit to and up addition Our in stream XX% LTG year, growth in year, the with the the driven revenue and consumable for strong million revenue in the by $XXX million for for X% royalty growth and and increases respectively, quarter quarter the $XX.X year, for quarter.

up the approximately the diagnostic the for and million year, quarter down year, for for $XX $XXX Our million XX% for the molecular by quarter was driven the and X% LabCorp stream revenue departure. primarily

franchise, year, our this the the sample-to-answer driven was was continued LabCorp, XX% for XX% for revenue of by XX% Excluding XX% respectively. year. success stream and up and for up which quarter the and quarter Performance the here was

our both For the number sample-to-answer per the increase. continued of active utilization has customers to customer products, and

increased up VERIGENE prior from and XX% fourth up the from for for year the ARIES line $XX,XXX, annual the $XXX,XXX, quarter, per utilization prior customer to For XX% utilization rate the our product year. annual was our average products quarter

agreements. systems, both X% few the Turning of we of Included placed and allocation to quarter items, the and This to xMAP our reagent for increase including prior purchases more with sales year not ARIES per XX% the XXX are XXX line sales quarter revenue within bulk during systems, the rental communicated under high VERIGENE our of not Consumable placed were XXX multiplex systems, to large of expectation our partners a in quarter. ARIES and our and end year, of phenomenon systems, higher quarter. revenue those reagent VERIGENE system our by a unexpected. rental the revenues by than for for the driven quarter was up systems compared fourth

sales the the year, expected quarter XX% consumable revenues front assay respectively. were were and reported year, in relative end-user up adjustments. and the the for for X% they by in end-user driven increase revenue times, partners. XXXX back were half XX% Royalty and not quarter full down the an diagnostics be findings, including the grew molecular up of payments for the revenue year number half in for reduction royalty weighted a quarter audit the year. audit to were weighted minimum our for of year, stream, and where to XX% toward to Base XXXX our in and revenues X% the XX% This Similar base and sales the indicated reflected of LabCorp. primarily we've As by

previously this respectively, sample-to-answer and XX% discussed. the in predominantly revenue assays year, XX% and quarter assay by impact, growth Excluding full driven was up for our

full of year, XX% posted and percentage Now by X down from turning fourth percentage to and XX% the for typically the XXXX we quarter income year. corporate primarily quarter attributable margins points Women's Health the and X averages. statement, assays these reduction of the higher than in carry decline products margin points our prior full gross as a much from LabCorp is the This to gross

both our continue of to sample-to-answer cost improvement focus on increase volume efficiency. through and margins We

prior margin both primarily for Relative the higher that marketing increases. X% profit the operating support to compared the initiatives, margin up the Overall, expenses development year OpEx and to acquisition-related planned expenses to to were the year, relative and SG&A sales expense decline expenses operating our but to to year our showing to research compression as million and operating declined R&D efforts. operating moderately a our million Operating million year. continue and gross $X.X was control current of due levels. in We or aforementioned and the included approximately year, in $XX.X for X% prior the expenses for year, $X.X

fourth the of to in quarter Our was effective tax fourth rate compared the XXXX. quarter as XXX% XXX% for

tax for As the the appropriate rate the arrive that year-to-date represents reflects current at year. necessary adjustments rate typically effective reminder, quarterly to a expectations

million XXXX As reform expenses. incorporated you Included and expectation the adjustments payments our a million effective million impacts purchase one-time in Millipore from jurisdictional the million on current tax the foreign our stemming included expenses and inclusive overall are year can release of based our US the XX%, cash Tax Jobs driven charges, partially which at quarter the tax and year for additional U.S. over $XX.X the for absorbing current time. Cuts deferred in distribution $X the from in and on strong assets of business provisional U.S. million financials, DSOs million $XX.X liabilities, of the our $X.X by of sheet balance received quarter updates was the for to the U.S., of dividends to quarter prior tax acquired current solid approximately of for flow and cash tax the of of in tax approximately accounts earnings offset inventory remaining $X on valuation net a one-time the expectations rate investments, to with from We also adjustment repatriation receivable to $X the cytometry tax before revenues during for allowances see payments Act of associated The Cuts and adjustments with and Canadian for tax generated of and million Jobs previously expenses related by revaluation not by taxed Dutch acquisition $XX the Tax after losses. and of transition future year. Act. of deferred the impacts $XX of The cash remains million and benefit recent

between million, revenue be that million an loss As $XXX XXXX million expect total LabCorp of we've Luminex includes approximate we XXXX, X% revenue. of over for and total to a indicated approximately increase $XX previously, $XXX revenue

for $XXX coming the all approximately as partner the grow the as we Excluding business was expected we million growth expect flat streams approximately the in $XXX to to LabCorp loss business with XXXX to slightly of revenue, base MDx from be of year. our revenue our to down million

interesting million to expect $XX.X franchise, revenue run we in we’ve approximately It’s rate of our million our to $XXX Additionally, XXXX end sample-to-answer at or close note targeted. up in XXXX line revenue standpoint, the FLEXMAP spite year we in flu the One sample-to-answer the grow which of XX% the and anticipate to From year contributed that to quarter by of sales completion we $X XD a be by replacement. expect million to in million first season. a of system this of weak result a the be to $XX relatively approximately item down as Lambda stream

not xMAP between purchases of royalty the which result slightly lines, and also in in sample-to-answer by from X%, Our as to be utilization be quarter. the XXX our that reflecting the to of placement in of the participate. approximately system some departure, assay across up expected XXXX in non-automated expansion be expectations are finally, all line and rates large marketplace, year expected down with XXXX. partners repeat of including same product the And is continued to a technology per in XXX in markets expected remain double-digits. partner up the LabCorp the prior our won't Base our level revenue is growth Consumables of revenue

We system expect service total. sales our to and of flow year approximately contribute for XX% cytometry $XX about the accounting with million business this

space of mentioned, the the within strategic ultimate expansion priority. we've a revenue is As recurring flow

by fourth first and to new stream. our XX% fourth should quarter, flow to revenue the from revenue entire million be quarter as and to expect we $X from with revenue Relative a the deliver a the should volatility findings revenue fourth consumable quarter revenue remains million, the had business of about revenue to down of and system as but will fourth revenue the stream. included the Consumable XX% base down royalty be million of royalties for result quarter assay we good with $XX from with total up across be contribution up, for slightly fourth the XXXX, quarter For down Base between quarter expect quarter-to-quarter be we coming flow the in total portfolio. elevated very total audit the us. slightly XX royalty up but

the quarter could previously, into we factors. included respect approximately see of as profitability, flu mentioned a impact LabCorp nominal. in current were result I of $X revenue. There totaling fall the gross higher final the As With quarter million the season to some buys XXs is during fourth several margins

is obvious departure. LabCorp the First and most

the a down scale. to depending a quarter-to-quarter loss mix of is state, us breakeven business of quarters gross several steady line margins our and we push the of the as across the is gross the half of mind rules, and cash flow contributions. of of corporate to until primarily gross a sample-to-answer have recent flow from volumes acquired have which margins the for expect could the new all experience economies One franchise on been remain overall affects for volumes below artificially for activity inventory. margin still in be up that and have on flow will Second, or flow result quarter. or that has been such growth as derived the mark-to-market, is driver significant averages, margins profitability margins our it completed our has in still compression and relative of the revenue experience further, until presence accounting account acquired ultimate we And business keep could thing can the of rise both returned revenues reported exhausted giving revenues, this the to the we a we mix and which benefit thirdly, year, integration gross over all our inventory so flow volatility item margins time although to low positive overall the Obviously total as

XXXX, activity of XXXX, not the lightly a affecting a growing as sustainable do from returning of clinical current result to further expenses be year. R&D during have lot We trial the end scheduled will take by and are and committed and elevated We to profitability this profitability.

Homi to that as and and we with to Finally, and double-digit acceleration to growth reiterate of in flow. beyond XXXX revenue profitability return I plan cash mentioned, want

for comments. to over like final back turn Homi I'd to some it Now

closing, to the Thanks, In businesses. its continued Harriss. power diversified of Luminex demonstrate

we Our in wisely growth drive our as model entire across businesses. to pipeline to committed development remain continues meaningful product investing our

a more $XXX XXXX, end reported of when the in accounting as Luminex our of than we XX% Just revenue. reminder, for total million LabCorp joined revenue I with of

organic transformation revenue. contribution, As we $XXX enter XXXX, amazing approximately I it revenue more XXXX year likely commitment XX%, an at and the million, of and million acquisition. will end our account Not challenging with our a strong by the as a and by execution including trial midpoint the our by of clinical call LabCorp our and fueled for LabCorp R&D of of departure the than total LabCorp our guidance XXXX of strong to bottom result grown line successful strategic Luminex direction. ongoing will be for expenditure. growth will $XX of would have

quite I'm will our that our growth, delivered. back the improve comments. ends Operator, consistently to see and open Luminex line confident have double-digit toward beyond gross for we as questions.. earning formal we XXXX, returning please look we However, This margin the level

Thank comes Our of question Dan Citigroup. first from [Operator you. Arias Instructions]

Your is now open. line

you’re revenue $XX $XX Thanks. or base said was guys. acquired, million? the of what’s it that growth X%, you or million Millipore just off is to of I something afternoon million, X% like million for around know looking I’m product but you $XX for the curious Good if more double-digit $XX Harriss, XXXX off

in about grow on than is we double growing number business less the to million, for the will that call. the flow based digits. expectation The mid-XXs the actually talked is $XX little that the a So base at it

Francisco sample-to-answer, very confident in to $XXX split here, hairs and were think the said about now that or million I you at if San $XXX rate Okay. by target of end there the I comment I want run for the to believe in to million get but your you And was the close just don’t just year.

So, just that's in the around a different there language? curious anything there’s the words couple of or at whether just if moving forecast all in

split don’t $XX hairs million close to right. $XXX right want million, either be Yes. I would at but or to million, would be at $XXX

or have confident current We're around So, shape there… our should at we're maybe million. said that based trajectory I $XXX at very good on

Yes.

QX we not of matter QX season there a running we around rate from $XX obviously a will that strong talk QX, in that there. As flu million when climb or is for be no to And enjoyed fact, million we we $XX rate will running -- compared season. whatsoever, and a last flu year

I think we really million. $XXX rate to the running achieve are the on track of

Okay.

on if sneak one checking and could that, Just I in. maybe more

On at labs talked the have this do there, is so you heavy I fairly are really utilization, about, of are just handful broad high curious percentage users that volume have near but point a level sample-to-answer or of that if $XXX,XXX customers speak? lifting, it don’t that you what exact you numbers of base the the a at to doing the I’m know that average

interesting me it’s you dangerous it right. data averages. tells some times So give but thing, let I’ve danger said that averages you are the of many

past $XX,XXX. million net So down in for runs than average about year from the mentioned the average an customer at the adds of over excess to $X.X at less the the number, VERIGENE end VERIGENE, of we customer from XX per months, $XXX,XXX

slowly as utilization the volumes again the the average range area up utilization swath has to of the of all time a way, a our hospitals. dangers a breadth year, customers averages but million and of has wide within of $XXX,XXXs in because been VERIGENE and been very they inching customer averages, average the creeped $X.XX they slowly an that our from all products. in depending averages inching $X,XXX is very of excess it’s a $XX,XXX overall It’s of utilization but utilization been one has up -- customers using inched a as wide annualize. So the because of of over $XX,XXX, that annualize again across indicative up the our wide at our their down as an same have the on of up very of sorry, base

Yes.

helpful. Okay. you, Thank That's Harriss.

You bet.

Bank. Thank you. from Dan of Leonard And question our Deutsche next comes

Your line now open. is

you. Thank

in down sequential better or is meaningful a prepared step off, went And like to and Luminex base QX, QX, for first between there to it understand the just But understand remarks. of would and So it as different you to in trying that, the what Harriss, over versus trying the bridge you it’s were from consumables primarily biggest some year-end business, seem and QX your the classify does QX know dynamics? this historically. I bump variables seen consumables of the QX stocking we’ve parts in

pieces. big there's So three

XXX/XXX The first replacement installed of completion is we FLEXMAP mentioned the of systems. One Lambda XD LUMINEX previously

is complete Lambda every with had the past as One years. systems XD quarter three buying for So, essentially they FLEXMAP

purchases And end don't so happen we the the quarter. first of as those into move

Secondly, right, over consumables in -- quarter purchase remains, and fall over off. volatility We had continues. the a very that the we and we about good talk quarter phenomenon again the fourth consumable bulk

-- previously expectations audit are tagged that revenue don’t a our we so the run dip continues some that bearing royalty as item we would there as what drop. why the that’s found that products base for so findings included royalty royalty overall, that customers royalties, found fourth royalties, rise. obviously quarter little were been But issues tagged in on which audit And hadn’t now thirdly, were the bit. rate that And to they bearing, the because consumables and a are increase -- repeat were within

cytometry business big lifts back quarter those up. we chunks decline you then the three to quarter So fourth first are and flow gets that the base have us the in that obviously really business. the to from And a the

revenue And what and any QX we down all margin but qualitative I would think XXXX should XX.X Millipore you but we down again gross the be margin in appreciate LabCorp presumably margins, to quarter about the that for gross the like, as a quarter on that on or look? the run finer quarter, reasonable would in in helpful. point rate? to given so it about expect it given meaningfully that gross That’s margin modeling fourth the from using you had fourth -- base, put lower can some a on time think And then products, variables, could Okay. XXXX this what as plan exist that be won't look

Yes.

it of So, significantly consolidated It’s decent there’s our obviously of down again definitely one, be that margins. size should quarter, LabCorp and -- reduction couple margins that factors but here corporate a the in at there’s revenue. is a a a play higher on number the gross carries couple Number not than $XX million averages. it’s

what acquired financials, low rest. business. to But you have with the through amounts integration zero all on it of very pulls bucket of and effectively that flow work There the addition So value go inventory down. operating you inventory of the business very, the your same gross approaching been the the fair that has and margins until margin the has of expenses because you expenses

compression margin the you So, end with of gross both bottom up through. compression and in flows that line

don't I helps that know but... So if

Well accounting as non-GAAP to -- it related that a out inventory, sorry, out reconciliation? some back kind you the the plan step back -- step-up you and wouldn't to was plan to to on Millipore out wouldn’t of purchase

be ultimately basis margin Well, certainly. on what where about it. you would -- included, without a sure. forma that We’ll tell pro talk We’ll

you. Thank Okay.

But can’t obviously. give I right to you now,

Peterson Tycho JPMorgan. Thank of you. And question from next comes our

now line open. is Your

can of of the quarter, stocking out, Harriss, the component?? was again, quantify I to Hi, ask but called you I in impact this but the Couple you hate one you know things follow-ups. three stocking quantify can thanks. that

Stock; talking you for just franchise. our sample-to-answer

Yes.

the with our we result success -- a flu significant franchise. as sample-to-answer Really seen haven’t not significant the because some in; season we flu coming demand of had season

We that continue during to the the to number customers mentioned continues quarter, number of of active systems place systems. rise. the Homi we contracted

quarter in minimal. impact stocking the the So fourth was

on ARIES, of averages, challenges are flow-through And systems? rough both how then us and does you I sense increase for XXXX. both average that a you flow-through give can of but about for And VERIGENE you annualized that assuming in thinking the understand

Sure.

the So at that obviously. three customers the rate customer flow-through function months, in customer a things, new in annual a although only math the most looking two the because you number which you're one, add is right, new of figure in a is for Number is a at quarter. an at

nine counted XX have others so, ARIES those for for for all ordering you for math. customers months. those We and past look the been customers months. months, ordered at have XXX have for and are for We the there months, months. been six VERIGENE of Yes, in there while that have three number they in active the what And annualize that XX don’t both customers

And new so time. for ordered of short very customers, period they’ve a for only

expect XX customers those number as belt, annualize would certainly that their full to So to or get under a months we continue drift upwards.

we than a that thus so and rate adding the you up. particular Now, it quarter if the annualizing customers we at in that can add number fortunately, more new goes customers up. have drifts certainly mitigate But quickly that expectation which do

any you near of And and panels term? headwinds flex, as narrower Okay. toward don’t kind the trend see in that the

second No, of see see any I part VERIGENE the year and maybe don't I in planning except the mean we are basically to there. additional -- any customer, II headwind launch don’t I new

have would So And we to system. EP are to together our would like in the utilization as all we the minimize of the close more impact the on we of they both and RP the customer like bring there. so the keep launch existing direction the and of the launch we we time saying,

our strategy. So that's

second started off of for product. the and of matter the getting part the we training kick have force time a year ready week our fact meeting in sales As a to launch a in about

one last the in sales in the kind LTG to market to direct one about in of and And then flow? synergies with know and just to past then force curious the and enhance go what talked workflow. flow combining baking technology degree on leveraging I the LTG revenue you’re you've bead between business, imaging

doing businesses the the between of are kind things capture revenue there that kind to of guidance? synergies So two drive you're

No, not at all, Tycho.

map road the product in lines for line. working cytometry R&D now the are the the product and flow on priority and the We

product. to We it we more quarter will than we that, of or either but or till and at working quarter into the identify not on seeing how example leverage obviously take unity two, right can be big judgment business our the a [ph] and will resources an moving a quarter right least another start or two, using us

So business. cytometry at beyond will not flow XX% normal this stage thought increase it increasing we really anticipate any the be we do the

on our with obviously we the channel, our a the it's and thing something and their think result same yet royalties that and LTG and unless will systems When place front such the beads is flow today we environments end because to directly of we help that opportunity those we to Luminex technology, the selling to have in until those our those we partners. through driver as front feel indirect, a of the beads adopted is the which Another don't of in in systems haven't wanted hasn’t about, to that through and that maybe effect more our user of do customer Tycho was side, customers. assays partners get we of customers go Luminex it’s be through partners majority a partners super because – and effect compete

you. Thank Okay.

bet. You

you. Thank

question next Ji Sung of Our Nam comes from BTIG.

now line is open. Your

the the of or that LX the where SENSIPLEX was and it might taking near And of...…? system platform you the cetera is kind higher for looking entire I as kind FLEXMAP base if MAGPIX that there across thanks XXX, already or in et or evaluate like not be them to sounds curious customers this seen term. to correctly, of I’m throughput installed sure are Homi, if heard be it’ll Hi, the question. but testing

that bring during I to here Yes. Sung Ji. Thanks, are second in planning to our said -- partner No. testing we What start the system. quarter the

Okay.

the Our to is a the along targeting. come major their up each much SENSIPLEX compared of test, when before would their that adjust targeting end about partner are start we they internally get of a and the all area. more FLEXMAP the and the our of -- understanding LX and their that where XD, date would partner the give or in can it system, we research is to the not provide. in some partner, based every with in then on are system. bit will know in hoping the I’m them them them really couple for of set we’ll they we And the life year the in test us targeting of quarter might end And to base really LXXXX buying launching that’s The where feedback, little say, feedback capability they basically all not start XXX what will capability the like feedback testing and we partner how to mainly the system. that -- of we want different We'll SENSIPLEX second market. MAGPIX and sit the take by the backward

back going cetera, And Okay, kind also to flow us great. could remind associated the still expect of to -- And the synergies you business? regard business, then, with business et to you be there's seasonality of overall? question cytometry do if again accretive is there Tycho’s with flow

Yes.

Okay.

year will by the believe are what Yes. We business accretive There is no that’s end. be – we still working.

As matter obviously we might just invest investing, Merck We're we are TSA to have paying and of [ph]. for we're saying, argument. our initially

are by money quarter. time, with But as basement those that's third them will a a transactional lot and unfortunately we during we of So, cost by believe agreement then make face we quarter. the the second be profitable business, the capital be first the QX end a They few of it nature out Most business. more money probably and the the more of will on have we have of this tends as them. to will other of the service TSA phase out will Yes, we that, there business. -- of business, any year the become and capital us

will the have the revenue So yes, more of coming anticipate rest quarter in than we the fourth year.

you. Thank Great.

you. Thank

comes of Brian Blair. Our next from question Weinstein William

open. line now Your is

mix back? up Brackmann provide wonder guys bit you competitive changes given the any of couple for Andrew the if of reimbursement I actually Brian. change the there environment commentary is months This for little could on a just assay or VERIGENE, guys. Hi,

No, the Andrew, same.

launch busy we -- trial. we extremely II two would the the the those culture. saying previously beyond ramping on assay keep and and launch But on also plus, that’s I said at moment EP We blood with to that we’re release RP we’re saying are like wrapping the one it started that, we up along, really VERIGENE the the what is but for are MRCA -- all the we next up. clinical As the as that working also we and

to rest finished, we least the or to more putting as those with at the that head due but -- MRCA above start trials both the soon So get our water be assay. and EP resources we'll are the of as

total The absent has culture respiratory remained equal been where half the season. mix gastro of VERIGENE big roughly it been; the flu in in of blood has about and half, had where and the been assays other a has

so Homi changed the those So higher are working getting VERIGENE mentioned customers. other our provide a existing assays for quality to across much the that ones on mix and II hasn't launched solution we we can

there. Homi, to meant we in color life color that life there the on and that in be you Appreciate like any terms comments science it. And and maybe Got provide additional hopper potentially on the in to what acquisitions, should then, relative signal of something expect that? would sciences, something timing could might your

we like to Nanosphere and looking extremely acquisition keep was We to which strategic looking provide us. opportunity are done have with we good

there, the a will changes and but -- it. in cytometry of said, pro a bought we and con Nanosphere are integrating that acquisition midst company be I a here lot of now we flow a we bought acquisition, again We because the It’s are its the of again but need make has as [Indiscernible] hoping to business. we great each those

employee every we email So paid, and make getting also insurance to health cetera. need sure et and

successful So, Nanosphere. each have will a of very with cytometry the the kind with but nevertheless done we different are we business, make flow confident as has them it we base, of

is our be generate able molecular will -- look but afford what of if down, will we diagnostic, year. cash, create in even looking will to we asset, profitability that both this the continue do the we that, life part And we start if be the on at hopefully so some it. something will to Now, or that in we there to that's like, for beyond only LTG and limited science,

Got it. Thank you.

bet. You

Thank you.

next Couillard question Jefferies. of from Brandon Our comes

line now Your is open.

Thanks.

Just gross off to that's case, a I couple accretive the of XX% are housekeeping such for the by inventory fourth would Homi. talked it I the roll Would imagine back above quarter, quarter, Millipore the actually you by you exiting think margins that year? expect being fourth about the level step-up the

We second expect quarter. to is this Harriss, by would actually off it -- roll of Brandon, end the the

and a for saw we about up thinking in what that sort of XXXX, with in you then help be rate XXXX? you do step could And little pencil XXXX, CapEx should for effective we us a non-GAAP Perfect. then bit in tax

of expenditures Yes, so our XXXX CapEx were volume. manufacturing accommodate lot improvements significantly to facilities the in for higher

United like production that. to So was in too of other we from places States today significant What relative already a facilities question, to lot I changes make there to but accommodate have of we to any we're don't as your Millipore will have shouldn't facilities remember move be exists our space completing accommodated, India be to that, because XXXX, obviously into incremental movement that.

effective non-GAAP The for tax year. rate the

rate, Non-GAAP yes. tax effective

drives of or effective generated up seven entities, we over U.S. losses U.S. tax consolidated that tax -- rate, countries. because is XX%. effective our obviously The The tax a into of it that the have our higher we is exposure lot in rate tax run in six profitability infringes just in challenge one So Effective is operations. other for obviously rate. the on challenge countries, U.S. a the it, number drives

expect very I be you, look I to than of little XXXX, tax into rate to is less you a small, go complicated math. X%, more the like while into is want as effective the would and that that a the than is tell cash So, details the what I rate can tax don’t

say tax available we R&D of very rate, XX% of you tax utilization have rest peg would would NOLs XX%, is to that the but because small that credits probably us. I that component of to a all and taxes would actual So, you cash and effective the

good. Thank Very you.

You bet.

of you. [Operator from Piper Jaffray. Our Thank next Instructions] Bill question comes Quirk

now Your line is open.

Great. everybody. Thanks, good afternoon

So XXXX of or that talk Homi, to Millipore million, guess, of could it $XX composition the with a XXXX guess little the of business is the that sort pretty what and acquired you now? bit I plans as you happy I question, under team, is are in size first about the just increase little have here you it recognizing sales

question. good Thanks, Yes. a It’s Bill.

business earlier, was for when it a the I First, Millipore when said as [Indiscernible] we got we out. -- carve

I carve reason, from XX% So total the out, less we okay, about got some to people the obtained. of anticipated, we think them a lot of we

was fill of up position, -- the it’s sales So less not we other are in going to and aspects the XX% surveys those overall business.

people, people. in there them, acquired are planning So two there we the in down just first, it about need In we level was down, to mainly is we which that one USA, force Europe. recruit three to before to we or the sales back are the where increase I think

can, answers moving question. to we going those them. up as we are fast the So fill as keep that and position Hopefully

to make question very back the and long-term have overall obviously outside your Harriss any implication but then question picture just be Yes, but high because just my thoughts to cash rate? your for then fairly are And NOLs try have fairly goes you've taxed a maybe about in I know tax effective earlier the the Any the of for there I reduce margin, it pretty losses tax I to U.S. income sitting high got answered getting low. rate your much. yet that does. huge statement, higher longer-term coming got at question I to effective Thank a got mean, setup fact here rate. you've I effective which is royalty bigger you But are you and it appreciate the in a business taxes rate -- that guys, just…? on lot higher and U.S. don't the

tax profit but Then makes Luminex all case in of is going table in front another an offset pays XX%. and rate at the Yes, rate looking in million the no say because you you by million this pay $X,XXX and still to of and consolidated of XX%. one gets in going be profit, help is peal when so effective the the million tax where -- taxes example, with me, giving involved country million $XX,XXX suddenly a $XX $XX But is but and in Luminex in I or with multiple situation corporate am $X,XXX the line $X,XXX the And income another at that not taxes countries taxes. losing me pre-tax taxable of have of so a let in $XX country, let’s $X not of right. income Luminex becomes off just you to the $X next total Luminex you million

So now were U.S. XX% have the suddenly your earnings though rate you rate. appropriate taxed even tax effective at

taxes the NOLs So can where combine the you multiple actually as handle NOLs math countries when through to using paying those profit there as is and to the offset in a cash it. us The use NOLs countries position portion that. opposed of we that due

rate high. absent come tax rates in But of mathematical we through. the in U.S., them changes be, expect structure that our that all drives our are a it’s the the to and Trump unfortunately So issue tax have where exactly tax rest effective

our of right profitability tax with more turn it generate sales the question? help in And back be countries with at toward margin so those income effective instance, answer either yourself just zero. rate your or countries tax now that no would would in and that for case. with comfortable would pretty Does the you drop we’re up, find to, foreign tax equivalent most set due, So what

up Thanks. offline. I fine. follow Yes, may that’s you

fine. That’s

turn our And to you. ladies Homi like question-and-answer the now conclude would gentlemen, remarks. session. back Shamir does and for this to closing call Thank over any I

look you. on you seeing Sonia, call. and earnings Thank you your the forward to our attendance We near person very you, in Thank for in future. thank everyone

Ladies and This today’s for thank conference. today’s concludes you gentlemen, program. participating in

You all great a disconnect. have day. Everyone, may