Luminex (LMNX) 10 Feb 202019 Q4 Earnings call transcript

Good day, ladies and gentlemen and welcome to Luminex Corporation’s Fourth Quarter and Full Year 2019 Earnings Conference Call. My name is Dwayne and I'll be your conference 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 of call remarks. Investor now Christensen, to Please turn Director Senior Relations, to would over the Jeff proceed. I for opening

me President And are and Currie, CFO. afternoon. thank for President us. Good you Senior Vice Homi CEO; and With Shamir, and Harriss joining today

Following we'll questions. take their comments, your

our is As six Investor the months call and website. replay being of reminder, a conference will a on Relations recorded, today's be for section available

are differ materially control which differences in XX-K to the from to anticipated XXE and those consequently could or or adversely forward-looking contribute our statements Securities and and may historical Section Certain uncertainties, that actual statements XXXX, during in on results detailed cause beyond known be the such claims could within Factors by are of statements. of and risk based plans that cause our such as are are and Company's the Litigation Company statements. Exchange projections Form the current unknown of of and hereof update These these Private to forward-looking filed of Commission. reports be We call today's may undertake beliefs obligation meaning and and made to for review we no course ended Act December encourage these Securities and subject statements. and the year speak XXst the on XX-Q you the our statements the the provided Form forward-looking to expectations purely quarterly with forward-looking of Reform of Securities Act some Exchange only the documents, and date the

GAAP may G. non-GAAP and measures available this To as is is Regulation in are a financial measures earnings the with the comparable non-GAAP extent our included financial of G, certain financial in by in accordance any which defined call. to direct presentation our SEC release, measures on covered, most that website reconciliation covered Also, be Regulation

and President over to I'll the CEO, our Homi turn call Shamir.

everyone full Thanks, our to quarter Welcome our to call discuss fourth and Jeff. results. operational year

our quarter we last to on with revenues As fourth a earnings we both a strong delivered growing call, profitability. suggested sequentially and return year-over-year, by

As by partnership $XXX in finished stream, primary in stream growth revenue unchanged our year grow supported which We revenue partners’ our million, and single high our in marketplace. the indicator with the will strong at is success royalty prior XXXX. our expected, LTG estimate in the of mid the that digit the year

outlook closing with and in the Our growth Flow expectation, year in XXXX. the revenue with the Cytometry for grew similar out XX% line growth more than with

was slowed women’s down X% for the Molecular totaling affected and for the was year by Total related Diagnostic for revenue LabCorp departure revenues year. but revenue products other and were which the for year. LabCorp million revenue the up was sample-to-answer Molecular $XX XX% directly up Adjusting departure, health of

we for As expected II will VERIGENE of move XX% year. be launch the approximately product revenues into that estimate midyear, up the sample-to-answer XXXX with we

launches a be with transformative will year new Luminex, XXXX supporting for return-to-accelerated three growth. product a

assays the Currently, reviewed next first and the is FDA. week then are launch and to product mentioned, and our system. II plan II GI VERIGENE assay commercially being respiratory assay clearances. flex system I We As submit new after the the system VERIGENE our the both by soon

both the throughput system VERIGENE room footprint, The featuring solution, The to a fully the new compelling achieving the products. should system provides make VERIGENE II storage with system many improvements competitive come that current over equivalent system. and for significantly current with temperature offering reduced automated

strong. for solution with Assays these they our trajectory growth us what designed sample-to-answer users to confidence new are of to end advantage labs pay coupled from All that to be features allows in our being take give which current support, feedback only need. will flex continue

the provides market. dimension exciting second the completed under Development next-generation INTELLIFLEX. It a past as for the on new protein product system, the name that official revised really a of are and be modern system feature of we’ll new enhancement has xMAP our launching This referred looking xMAP SENSIPLEX, to previously out is system the modern market which in to what to shipments, widely the new multiplexing. we XX for hands are us is years. a been validation XMP upgrade of to-date putting system currently approximately process XX,XXX represents of the considered our through gold standard initially forward for opportunity. provides focused rolling this set, has trusted mid-year. we research the of systems, today to technology the working this platform cumulative for significant partner for be and market With INTELLIFLEX be will system The the

to within with a is walkaway as portfolio position global Finally, goal the Guava of to other acquired align products we forward rebranding next software numerous and The enhancement benchtop our look system. is to in continuing group easyCyte leader grow to Cytometry Cytometry generation announcements, to ease-of-use, our stream. system With this flow cytometry revenue our of augment space. strengthen our Flow newly the Flow the

and addition portfolio Following in evaluation be excellent gram-negative numerous with other promise. will new to gram-positive, additional culture, VERIGENE and yeas, well this blood as including as but opportunities our II exciting assays, meningitis, still

$XXX with the to products ability new shown our We the million $XXX portfolio. guidance have have on execution I of respect effective to that to the are both based we current mentioned confident million achieve in range our and

for will our Harriss I a it some then and to guidance Now, financial update XXXX and over with return comments. turn closing

Homi. Thanks,

quarter year. million, with a XX% fourth a had the for up X% Homi revenue for quarter profitability. $XX.X the for and and up strong revenues was the growing As approximately quarter to return Consolidated mentioned, fourth we

inclusive revenue was for Flow LabCorp, XX% Excluding and quarter XX% for up revenues. Cytometry the the of year,

was and purchases revenue by impacted stream timing partners consumable variability flat $XX stream. timing for approximately by year, respective for prior was of the largest year. quarter, purchases million partners. consumable provides Our our the of for certain million our X% the quarter LTG the the The level down of of revenue the LTG $XXX Quarterly and revenue to from

strong double-digit we year, growth the royalty partners in which the growth experienced year, for However that having marketplace. indicates in our technology with revenue our are from prior with success the

For we the of to we consumables royalty in application. are have every ever, first surpassed will revenue, the more has consumable to that reason partners as our time commercial and and trend believe being used revenue continue more sell

comparison over was to prior revenue XX% year, year. expected the Flow revenue Cytometry financials the as in in Merck the in reported for up the

a items. the a As reminder, image-based these as And result, frequently experienced revenue of our are big systems. associated ticket with we've cytometers sales flow volatility

approximately the and quarter for the by year, quarter million year stream departure, year, impacted Diagnostic the was $XX XX% driven million by Molecular and down the Our $XX the million. primarily which LabCorp the for revenue for $XXX for flat

LabCorp, the Excluding for year. revenue and this stream X% up was for the X% quarter

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

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

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

by XXXX the to fourth of Cytometry revenue in the revenue of Turning XX% our than than items. business. line Flow for grew acquisition doubled more and year, quarter System the the more driven full

ARIES under ARIES systems, communicated systems, VERIGENE quarter, XXX the quarter. of systems, end and fourth not expectation placed we the in XXX our multiplex of systems, VERIGENE above per reagent high of of including both, placed Included allocation revenue are for sales xMAP systems XXX agreements. reagent During rental sales our to those and rental system our

revenues from this down stream our and partners. timing X% Consumable the year was full purchases XX% revenue by the impacted were of the quarter for for as

and were offset and by audit year. the both quarter not was findings royalty than quarter, full for partially XX% current a base reflected reported X% in adjustments for by however, Base sales unchanged increases an revenue our increase relatively the favorable for sales up mix of the lower year, Royalty up end-user audit user year. adjustments. These rates. more were This of was the end including partners and

the Similar assay Molecular in were LabCorp. for reduction Diagnostic and down the quarter revenues to primarily by XX% X% year, our revenue for stream, the driven

was that discussed. quarter for Flow inclusive up Excluding of revenue, and the year, as X% revenue was up the predominantly growth driven this previously modestly assays, for assay by Cytometry full impact, sample-to-answer our

prior statement. gross income LabCorp weighted the percentage full points the percentage from to of assay X sales XX% This attributable is quarter year. a change in and quarter lower in posted primarily points turning gross and the margin reduction for decline heavier items. the down year, towards We fourth of XXXX Now, mix, to and sales margins from X full the

margins anticipate through improving on focus to volume efficiency, continue XXXX. our we improve and both margins we cost sample-to-answer in As will

basis, the to amortization the year. to the present of predominantly was X% ongoing acquisition-related expenses was the Excluding prior not a due OpEx due in down intangibles, expenses for full-year figures. up absorption primarily OpEx in XX%, Cytometry of Flow prior quarter, On

Operating year profit prior quarter. $X relative the for was the million, quarter to up million $X

due year, expenses. incurred of the the we Cytometry $XX For margin of and aforementioned compression operating losses to primarily million, gross absorption Flow

required good However, the the revenue quarter profitability indication in is our of to a fourth levels XXXX. profitability in achieve

to the quarter. the compared adjustments Tax a which of Our as quarter in the XXXX quarter fourth prior XXX% effective year U.S. rate fourth of to XX% for whopping tax XXXX, in was to incorporated the Reform impacts the onetime

sheet losses adapt million absorbing our business. cash strength the balance and Cytometry XXXX, and business over is operations the our from Cytometry investments million modest with and face absorbing and while Flow to indicator a after residual of from generated of on of organic to and remains Flow cash over shows $XX of an We basis. business. initial continue cash strong, $XX in Our of in operations of This million expenditures dividend purchase LabCorp great capacity dividend the after $XX continued our fund generation the losses to in the

be in disclosed $XXX between expect we to and early XXXX revenues million. million $XXX we January, As for

high the our expect partnership single revenue to grow We to digits. in stream mid

to mid for for total our year for the grow by expect our growth year, to full single in high tools. flow science about we XX% and life digit the Additionally, clinical revenues resulting

growing Additionally, mid-XXs high mid-year. incorporating the sample-to-answer the of MDx to II in around solutions at to grow we and our expect in the digits single component the mid VERIGENE or launch with

expenses operating and by full XXXX We our should that margins mid-XXs, the be XXXX, a year quarterly the mix. also in affected gross on with flat for should obviously roughly remain basis believe

CF the but timing of quarter the $XX by LabCorp $XXX approximately the million declines growth revenue. But full revenues compared year, half million will decline CF half $X.X the of revenues and first that back and $XXX the The impact $XXX in and increase about year, women's year. partners. $X the of are LabCorp a timing of million the million, quarterly LabCorp be million in XXXX. purchase to quarter million CF. on expected of from CF $X.X a the per the quarter the contractual coming of between results million, split. The launches This and a the to year until commitments, anticipate $XXX and affected year another be expect reduction in includes to our in has million half product of our from our last $X which revenues will are health of of health purely prior XX-XX we be in the new from be negative first revenues year For end million between back will we to XXXX from both million women's we the Currently, continue approximately the $XX result

XXXX on to require that million we in be but expect as whole, excess revenues $XX profitable a a be a to We year for quarterly basis. Luminex estimate consistently profitable of

positive We to cash for be also year. expect flow the

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

Thanks, Harriss.

has to I'd several accomplished significant highlighting the end past the by years. again Luminex transformation like in

and our concentration During my about XXXX with are between out faced products, and an of Luminex, in were our our which we at year total those over businesses, tremendous XX-XX revenue split in $XXX and PGx revenue. LabCorp full together risk partnership even has X% revenue and annually. Company was of grown nonstrategic without revenue our of MDx annually, them, the XX% about totaled We biodefense average million first Today, by business.

unique confidence our strategically goal three $XXX give of each that to are much few our ability with We the next streams, years. in growing more million focused us with achieve in revenue features

Operator, for please open lines the questions.

Thank you, sir.

Q&A session, the the CEO, the we go turn to back some Before few to Shamir would to Homi and like President remarks. I for call

a the Good coronavirus. afternoon, have last couple days, about everybody. In of we been the asked lot

on open Luminex a we quick to before of the on kind update activity to wanted provide I So, Q&A coronavirus.

the Chinese we So, authorization China, and for waiting and last approval. approval RPP use a the emergency in NxTAG response week to-date are currently first, submitted to FDA

we ago, the this product soon. clinical large weeks few planned submit for to China it to a and Additionally, trial a completed in FDA have Chinese

NxTAG RPP has coronavirus. are of targets X XX which

panel are multiplex none Wuhan that and new NxTAG to there. are test However, us coronavirus. Chinese we is the running based Behind benefit is small rule the chemistry and a also SARS of CDC RPP, a it help create corona of to currently to new new the product on respiratory containing But it, RPP. new of parallel infection the developing the in coronavirus, vision MERS our asked the NxTAG this out same

be plates solution will run till the that as CDC market. only is believe far time The to within plates two China XX in minutes. well. As will can or We the XX be panel I this XX know, We shop multiplex lead that patients test up of XX weeks. probably full approximately on will

being Just for you, of at low industry NxTAG product volume cleared when high to a years, become FDA remind the the tests need many it’s RPP an cost. you workhorse

published will publish think and and they immediately. a This ARIES tested And concept hospitals ordered And together paper to it on and several our Mix [indiscernible]. implement we shortly using very a system, they a customers and Exo+ design are really be can Extraction can ARIES because platform. great our white to it Master our a solution with Concerning market, primer prime that. be the USA we on can we design probe

thing that Shanghai we China. have in them last over employees XX are and Beijing. Most in One is of

For their we safety. we office. and or are the not are them into pray their travelling they safety, -- of coming to home Most for working

operator, So, Q&A. call that, the can with you back turn to the

from show ahead. question Couillard Instructions] you, Thank Jefferies. Brandon comes first Please [Operator go our from sir. I

aware Homi, of? in basket from the as revenue Good should guidance afternoon. product we first some the And terms the speak the contributions in overall? any flat being us for moving of sense Harriss, then, of in year-over-year, to be the Hey. you Thanks. of secondly, ‘XX revenues to sort terms can you if quantifying of quarter could new parts give a launches

are our my bit little the $X be the from as have some Molecular So, last products, LabCorp. quarter that give CF there's to do we quarter moving $X.X attributed women's obligated this contractually we It'll of million, parts, that’s ever to But, health still still expect -- to in in I another sample-to-answer to have the expect purchases women's of about we mentioned us are health. Diagnostic LabCorp worry business partnership growth. growth LabCorp about in headwinds. timing comments, million the headwind attributable we headwind a And and by we of those purely

year. bought over XXXX they're will the so, of on And for that estimate minimums our current that us it’s total next those that from be based majority the to and year, the buy XXXX required

-- will and a year in have million then the million. up next $XX rebound have current around we'll to dip those of purchases around CF in purchases $XX So, we back year,

back to So, XX slip a we're talking to about and from up X XX.

product there's we're lines. -- the talked across some a of Otherwise, will million the or of all it's movement CF rest the our obviously. headwind other quarter about there So, $X expecting year. for so that a experience we growth of We

contributions And in that of the your Homi, other what and in? question new I was year think later was about for are products

Yes.

already we we stated really in some sales the immediately, is as to we pushing and can soon of planning cetera, we see et remarks, field approval. planning Harriss II beginning are really, But the few got his As third from from internationally, form a -- as get start planning customers some Matter VERIGENE quarter. we into although revenue are so. orders the of fact,

third planning it’s the of negotiation are the partner, going to in really of in launch quarter. also the the we as going the earlier. XMP get it -- Although them beginning I with to are technology, we new it. It's to they how in are we said, it are planning now, probably Concerning hand launch

feedback. their to waiting are We

Harris. And one more,

to might bridge in and on kind lift be pointed about for the ‘XX. contribute you year, some just year, dynamics of negative positive, gross you margin mid-XXs of sort other on be then doing the for you Could help that in where of You that kind to mix kind productivity of were think things try par with to terms of or the margins the gross internally profitability to the of line?

Sure.

our the on grows, as portfolio are margin. portfolio the slightly are below the currently, reported margins our So, improving. corporate there sample-to-answer aggregate gross sample-to-answer But margins

a improvement, see are revenue. those but becoming we percentage total revenues larger So, of

end rough obvious obviously quarterly and the the or have we can Then, between in And you a that X-point provide else. mix push. royalties concentration swing So, fluctuation and and systems everything with assets up a a X beads and of on basis.

do So, you does we we and the margins VERIGENE X XXXX XX, as than or throughout beyond, that a of consider year. give is II as recommending take move becomes around bigger XXs And move point to obviously is VERIGENE mid X the what VERIGENE I'm have going or part. into sort the I. better and obviously II further then

$X.X becomes think II years towards begin billion from to total would to the to our talked drift much now, scenario. close And component you expect back be what VERIGENE four, upward a about margins of revenue, Homi will we plan bigger in As five our XX.

you. Thank

from JP Peterson comes Morgan. from Tycho ahead. go next Our Please question

should how as in of quarter Could first impact up maybe well? about on to any flu want we think and in X% some gives LabCorp. focus takes just quarter business, the and just the impact talk molecular the notable I and about even you the excluding

customer than the of of prior was year at in significant were even What we increased not per year frontline nonexistent, almost number Luminex -- really we're at faced during is current flu the the with much negligible, as we One least -- was thing year. mind the the have classic you customers over a through year was season the fourth a quarter. well. So, the keep Utilization more the to though like current not course added of the end flu company.

room emergency in settings in care present respiratory patients Our acute distress. settings,

delayed other are people So, that relative we're frontline to testers.

fourth it longer hardly feel in us the for We flu felt effects So, to little of a anything takes the quarter. season.

year quarter seen we Moving into not bit, this flowed, the first lot. seen little but a its much. and a We've and haven't even ebbed

was lost primary expected season in the So, contributor year light to the to that what last than a as lighter was a season, light nothing it as year flu current but was near we relative the flu Hope as business been moves And a over the bit towards year. helps. that past non-automated this several as little the world of happening testing the way along automated solutions. has years

guess, Yes, I China, of out comments revenue about versus appreciate that we as China does. talk then, I you on And could think Homi, for corona. the opportunity your inside maybe there's this to how suppliers think revenue within think how year? you preference China? dynamics? those you about get seems you local do for could a like It contribution And much two

that I We don't the of lives, that the MAGPIX even itself. provide us okay? to can the thinking customer revenues save us. concentrating not know CDC test is know, CDC instrument trying large to across and China. really like people create Tycho. I'm what a can -- from they and coming At requirement enabling We moment, the I'm product

coronavirus XX dollars as trial have we said, will what the it -- were are SARS the a and any Okay? think mean asked of providing there in further in I've we clinical approval Wuhan the NxTAG them waiting targeted, having to coronavirus What you million provide we XX us Now, and just if we is their very case, we can like, the the the are tests. Chinese with are requirements. CDC large know a But, stage this the market. we been to or in the testing do we not, -- pathogens. make when here. providing approval that giving like really know this that them told, China future obviously MERS sure, or get it's But, I all broader And companies meet live for indication test have need RPP, we test of test. to is because we completed also them sure now. is Remind I again, couple any what cannot don't we a at in year increase you in

to how send that's feedback it us have why China. test fitting, here. us giving and about So, back have so. to They to it to we I it they be have to careful to have it’s and come the

one. meaningful you're Brandon you know VERIGENE hear a could one I hate but this us the of Understood. and ask you Could didn't about help about And of just contributions Guava system again. expecting asked II this be? just from to terms from what number then, new last in products, in I think terms I year? SENSIPLEX, new how actually

it Tycho, as what the year, at up have time launch we impact the very validation indicated was midyear that time, good nominal in but given for given II, us VERIGENE a such, well XXXX. growth that in sets the would

core launch, our that of a again, projections estimate current than launch reasons midyear then And back they half already So, a that the portfolio grow there in XXXX. the respect the of start. features. little of cycle of year VERIGENE is to hands, in a system some II other now With expected. in are Homi the as will contributor and as backwards modest -- And our compatibility the replacement much of are validating what's in with back SENSIPLEX. contribution portfolio called mentioned, the the bigger is with the midyear partner’s INTELLIFLEX The a front one that, will VERIGENE heavier we there's be the year half half

there to dollars, would the placement total contribution. drift that half. where quantified expectation be the are would haven’t in The they relative it upwards figures will first We be but in

be a project, business. position as middle flow bunch the But help establish update, the new there third again, of cytometry a won't the then, think player us that Guava solidifies ourselves in will software the easy-to-use in level, overly We And next-gen contribution but easy-to-use, further a it material, our something the that’s is features. primarily marketplace.

us VERIGENE of the competitor. as XX%. to II we’re be Can is fully it be that And in put have now. we us It But, as par a higher? Yes. not basically we’ll feeling system, we automated Maybe, depends, first growth will the give a as FDA. I semi the huge a to think or we all approval very space of which be It that pricing, panel -- here. from GI them. in The is approval get the get will flex unique, is expecting we’re opportunity to going us

think, will faster we that. we share. the grow it than moment, hopefully market we can I So, XX%. it gain even And At estimate

on Let's see adjust we and how in to the then later rolling get will it year. it

Okay. Thank you.

you. like the over and I'd Instructions] Shamir, show for call time. turn in at Homi I to the queue closing President [Operator remarks. questions no the back CEO, Thank this to

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

you Ladies gentlemen, today's Thank for participating. conference and this call. concludes

may You disconnect. now