Luminex (LMNX) 4 May 202020 Q1 Earnings call transcript

Good day, ladies and gentlemen and welcome to Luminex Corporation's First Quarter 2020 Earnings Conference Call. My name is Latif 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 Please now Currie, to opening turn proceed. Vice Senior Chief to would over the Harriss remarks. I Financial Officer

is joining and With you afternoon President for Good me CEO. thank today Homi Shamir, and us.

take we questions. Following will our your comments,

and of historical forward-looking today's not the is within made the our purely of may a today's such XXE be may consequently Certain and statements statements of will the being Securities Web a claims Act course call section Section reminder, statements. the As for Investor be Private six Relations the recorded replay during of available be months of Litigation conference meaning call Exchange the projections Company XXXX of provided by on the Reform Securities Act site. and

update these ended quarterly and our with cause statements. of These current and to forward-looking are XX on or and in based forward-looking to forward-looking documents the statements adversely no are the of and cause differ Company's subject anticipated Exchange the actual Form these Securities to and from some December or the as are speak statements. and risk you plans known materially in results reports date our are year hereof review such we to XX-K encourage control could that only which contribute beliefs and unknown beyond could expectations on to detailed Form for those filed the differences Factors or that and our XX-Q obligation We Commission. uncertainties, undertake

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

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

Harriss, Corporation, our to to call Luminex morning Thanks, good result. discuss quarter first and welcome

times all vastly you're As unprecedented ever we anything in from experienced. different living aware, we are

with are be While of global population we the positioned everything Luminex to pandemic. fortunate for to well being from the all this deeply health world the is state well concerned the of economy of

point, employees Without SARS-CoV-X will through their customer multiplied Cassette. of remainder our emergency split quickly dedicated majority the all into have our project are employees rapid more our technologies, able assay. ramped finding we ARIES test to able between with in Extraction NxTAG NxTAG assay up creativeness, which of be team to this and To NxTAG dedication, At for ARIES and than we remained authorization be ARIES solution Extended development, the managing month, use production patients. ARIES Panel per provide as this, and XXX,XXX and a the and produce resourcefulness and CoV exhibited to engaged our assay, a

Our as pandemic. and is direct dedicated outlook to our this workflow proud is strong on impact say that a ever I'm having a

announced test, the technologies. As delivering to testing a our our have plan we of market result the a are number direct increase customer the using capacity to of

our be days. customer announced have a few our mean swing. to a mission, hours testing Consistent System of sending a for clinically testing, with out to matter Additional, a in result they've time number critical are to our results products as which in-house purchased allow opposed actionable for delivering test COVID-XX samples can instead, in in to several Luminex ultimately, patient delivered

moderate our of most to high our continue complexity Just customers labs technology a and results. to deliver are reminder, excellent

combat are many to from working and COVID-XX entire this beads this to and serology many to vaccine outbreak possible. our who seeing Corona of are as update we associate virus solution treatment, partners test, help span a ways development significant going Additionally, the xMAP on in our systems other of initiative

also on pivotal we customers this focused are issues the of current facing are we today, while our solution to very crisis. role critical a the in to meet playing most long-term So being part

We previous result our XXXX, benefit quarter all delivered the $XX,XXX of revenue products. of quarter, focused in shy from a million the just XX.X realized fourth respiratory in the of sales the of with significant

total Our up and XX%. less XX%. million than total X.X totaled know both Most specifically, X% revenue, revenue was which we automated in XX.X by our products million molecular up the pandemic. our our Total was impacted positively revenue total include Molecular Diagnostic LTG non-automated flow XX.X stream diagnostic were million

we what was say respiratory cannot until available the our our and use of products to COVID-XX. customers end have Although COVID everything out the was of not quarter effect exactly did back rule we the related products many

Our first with the to LTG the expectation up with of majority increased of revenue X% quarter consumable in the line to attributable growth sales, compared were XXXX.

of flow the facility, customers close research to we their saw number revenues access affected limited significantly and Our facilities. as significantly were all a their COVID-XX by pandemic,

addition, ship. we we install than of which to or more In X million either unable have revenues, were

quarter of margin than expense in management maintenance were got as last will return revenue ahead of schedule. the they the and expenses well profitability gross Operating were in quarter to year less a in result

in diseases. ever see current life of addressing than to we and play the look and and future As rest portfolio more can value XXXX the altering critical our clearly we that beyond,

We VERIGENE our valuable access our products have on a SARS-CoV-X panels planning as as can that deliver Syndrome are I so that II, NxTAG-RPP manner. assay reliable in well Respiratory to customer targets and incorporating our results VERIGENE timely into

additional expand new manufacturing growing demand meet offerings to the capacity manufacturing to capacity our for place planning products. our in We further to have those have and sufficient accommodate

XXX,XXX per to end tests our manufacturing test planning more XXX,XXX over the today capacity We just from increase June. of are by tests to than month

NxTAG this still of will The used be produce capacity majority to products.

our are xMAP COVID to we in assist you, provide development remind technology follow pandemic. more XX have solution to we'll more professional days the But uniquely on working serology share. to suited is also solution We to on information and laboratories when

In reads at and we specificity assay. of software other are hundreds to into the each one of time, take which our beads where millions level deliver ability particular, beads xMAP at able to at time, sample translated very is high important technology reading sensitivity serology and a a since of variability time make at minimal only well, a in extremely

In public for addition, testing throughput xMAP ideal such format from well health as assays our XX high provide an base a platform screening.

on launch with our provide will our and as the regarding system track INTELLIFLEX system position xMAP will which our the leader maintain believe and access We LXXXX of the needed remain will program mid-year high research our over in help improvement much early that in to research. current customer Finally, the mid initiation for protein INTELLIFLEX to market the FMXD system partners. flex

million, our our guidance a we that due extremely second COVID-XX We specific guidance this year, to beat at release. quarter With able are providing expect of not the while XXX we will current year updated the up or the in to that We of million compared guidance be we full for QX time respect at above XX% will range to anticipate is full conjunction or revenue all economy. XXX update give with to top-end are causing revenue earnings last year. to confident more revenue our the uncertainty

comments. I to would the discuss With will detail, and that, some then final with I to financials to in over return like Harriss turn greater it

Thanks, Homi.

we great by We mentioned XX.X quarter across reported up led the As XXXX. a molecular Homi total of our of had XX% diagnostics growth over quarter first significant revenue portfolio. million first

XX%, reported streams, revenue our look products and million we up our of that at you demand quarter revenue related revenue diagnostics increased across result respective If for driven as the mainly a pandemic. by COVID-XX stream for was XX.X the respiratory molecular

revenue of XX.X first revenue, of revenue our up XXXX. in with quarter was XX%. And the of was molecular over technologies offset in a million up by tools partially consumable million revenue of licensed down million over group first XX.X the X% revenue In quarter, X%. X% XX% in for royalty XX.X contrast, XX% growth Sample-to-answer with XX.X non-automated diagnostics quarter diagnostics for decrease quarter a the the XXXX our up revenue million, molecular was

For down revenue million X.X cytometry XX%. was

Our ways. the flow significantly were current pandemic cytometry by revenue affected streams in several

our world slowdown customers in became down, a resulting of began to as in reps orders. access to limited, close potential First, the ability the sales

for had revenue and based that to shipped gain to and unable customer already ourselves in found the we orders key to of been Secondly, access system. site hand is customer, Installation delivered image recognition criteria. a the to the the install system

the one to available in we at them site. receive had Finally, customer but hand, no orders

As we had for possible. a installation, not for orders, or revenue waiting was either waiting million recognition $X ship over to which of result,

X.X approximately LabCorp In total moving the from us. of Also, million are quarter, headwind update do we any X% had LabCorp, material a significant We behind a further headwinds final revenue effects not nominal headwinds of quarter-over-quarter LabCortp on the current anticipate representing in quarter. forward. for the finally

and revenue driver our items, included systems and at placements, system by system This related partially the the shut and COVID xMAP decline down first compared diagnostic million X.X in was revenue decline revenue, this or Looking line down. pandemic was diagnostic directly flow to systems, to current sales revenue an was flow quarter a system molecular in XXXX, our offset of both the molecular quarter XX% cytometry xMAP increase of weakness those systems revenue. by system primary affected and

tripled quarter capital up during molecular are not diagnostic quarter. X%, rental Keep the xMAP of and in agreement sales XXX the We via majority the diagnostic sale. placed our system nearly systems mind, and system placements molecular during a

sale. the just As quarter Homi XXX placed in diagnostic we mentioned, XX% capital molecular systems about only via over

up attributable the due X% for in current of purchases lower base our Royalty of the Consumable revenue certain quarter XX% million for revenue the XX.X the partially down bulk quarter. million was royalties was from timing XX.X primarily partners. to quarter, to

our helping our adjustments. revenue up includes related on reminder, platforms all with our base pandemic. coupled total million assay of up battle a self royalty As and the as to XX.X accrual of audit products Total XX% revenue reported royalties, almost a XXX% respiratory contributions, Coronavirus with shortfalls result findings, was

that shift products, basis. on surprisingly, EUA COVID sales. total towards Our NxTAG related specific comprised respiratory that cleared initially use we our customers products. products of seen assay products And volume we've than our rule-in, have Not XX% a rule-out more now

first modestly revenue contract with million received all revenue revenue and the X.X BARDA the NxTAG COVID but $XXX,XXX we by XX% associated approximately panel. includes up the of plus development from X.X X% Service million was other up of was

the with of will the The received in contract be recognized assay AIRES second we COVID BARDA development that second quarter. associated

XX% our R&D, were quarter. Gross in This margins XX% with distribution expenses and result expenses, reduced was by higher margin the lower with Operating in activity lower reflects current flat sales primarily in expenses the items. roughly a by higher prior direct partially driven growth sales. of year, clinical equal which were consistent between year-over-year trial offset

growth, revenue all operating in margins control Our to operating consistent a contributed improvement significant our expense gross and profit.

quarter. effective of rate to March the compared benefit XX% the ended year XXXX for XXX% in quarter XX, prior Our tax was as a

Our reduction certain related to benefits worldwide aspects is unrecognized U.S. significantly and included by calculation distribution effective subsidiaries. related result subsidiaries X.X a as of of rate of discrete million to transition of our of the earnings. benefit year The our prior across affected an a the IRS loss for profit tax Canadian tax, the a in ruling

expect to be full and year rate effective consolidated XX%. between tax our We XX%

of In approximately Cash accrued paid. as XX unexpected year in sales first quarter one the the is et first million. which XX not commissions, was the down investments was bonuses, every million. for are quarter comparable were decline quarter approximately the typically XXXX, cetera This

expectations amount Homi of be for full to the full million above the and our of previous periods mentioned be would the to for At guidance for expectations second year, top-end relative these our cash XXX our quarter, and to second extremely XXXX XXX million. year current are of profitable current to full the higher a position. year significant as generate and of the quarter expect that current relative or levels revenue, cash we comparable

comments. some With that, I'd like final Homi for to it over to turn

Thanks Harriss.

our will hope more than history quicker. $XXX for time looking us company achieving in billion for first are the target dollar $X.X which to we We the get certainly will million forward

all out who impacted. go those to of been -- our While have

We are in role to proud address playing this helping to pandemic. be critical a

have important be continue plan for of to We years market are not further can an solution to and place resting enhance our portfolio, we success on to-date product in the part to so full come. own our

formal our ends line open for the Operator, question. comments. This please

to plus wanted expectations are current certainly around times. we distribution flavor or So witnessing We the our unprecedented of second expected revenue. provide our XXX some quarter quarter million

in a of expect And First molecular XXXX. sample-to-answer driving all, the of second of of quarter revenue is total we COVID-XX second quarter our potential the diagnostics sales doubling revenue. over

very NXTAG-RPP Additionally, for our we product. are experiencing strong demand

but cytometry the stream to expect our percentage, we On prior finally, hand, to in be less LTG quarter. quarter-over-quarter. down the relative expect flat a we be other than And year, continue to first roughly the flow revenue to as

before remark to questions. open closing One we up it

which During XXXX of of April, cash, generated back brought balance. the month XX/XX $XX us million above we our approximately

operator, the call questions. Now up please open to

of [Operator the first from Instructions] Nam Sung Ji BTIG. Our question line comes of

Your line is open.

Hi, questions. And you regards related also respiratory taking you for is everything products. of in guys and also My pathogen-related the you thank thank question are products COVID-XX. you. area And doing COVID-XX in first thank the to your for

U.S. testing of the to the if look -- and not, currently you at the about could opportunities related is talk in If also, exposure then what's outside you outside COVID-XX U.S., significant what of it you have new

we me -- currently maybe three EUAs. Let have

in of apply multiplexing the NxTAG-RPP. the QX to of EUA. expecting almost One We a for are beginning is additional completely somewhere three

will So, -- a or standalone. XX think the in the VERIGENE the submission panel. more obviously, we have I, into done is I it's that's expecting VERIGENE with in be pathogens. are the today SARS And RRP but also panel II. COVID-XX the Currently, or to we We're have incorporating FDA as the included XX

So to all somewhere EUA are July during get timeframe. those move expected

product international Asia, for another enough the country we think surge seeing market from but risk mainly. out Concerning the our of is not China, from now the Asia question funny rest yes, coming market, we coming in second the especially about international start

nice a see surge we So, there.

Europe, we seen product our system. on product have see as for demand our as a we read going lot NxTAG-RPP of In continuously LTG well the

which less x-U.S., diagnostic of comes based on molecular significant. downside, total not revenue So, that so asking Sung today hope XX% is Ji, I know, one than you're you already thing the right reported, just that we not revenue our exposure, let

more product -- is they're been a then don't issues, in the of what's curious that. kind been on going if resolved, a demand. to I capacity if or your lot you to was collection, so shortage And know has of if related about U.S. you with strong issue. your with think continue resolved, like supply of see recently or -- testing there's exposed just great. you What the been largely Okay, terms And and to that, testing the but in in this and given on of lot sample that's take strategies and less to regards your feel that issues

I cannot comment about that. I really don't know how to comment.

everything see availability we'd doing you Ji can as much the the all I mean, media, as do get Sung transfer done. to sample that increase either and universal of to we right,

that. and world, And collection drive, anybody able so help honest, the is a of be has that now driven there increase requires the And overall test to be the that's to testing increased to supply like over than time. -- exposed overall across the obviously, so run of more we're that else

me, the could all from you're instruments talk year. expected throughout the new new to then, products, you the Okay. launch lastly, And about all

mentioned, VERIGENE, timeline, any that INTELLIFLEX. the are maybe products, for Thank update or you VERIGENE you possible think the the next well product any of acceleration, even delays even as for to is line? Could as talked if you. potential cytometry some about flow there about gen I the there talk you

are used we don't the to still II, any they looking now Today to is COVID-XX we GI we of the anything mean proving you're that FDA, exact to only there. II in end see now Concerning July. changing related VERIGENE said, not and get I for in if I have. have INTELLIFLEX EUA tracking the not the the expecting The the somewhere COVID-XX. timeline still put submission into Yes. We are aware, we submitted. RFP correlated, to that is or we as to way that is anything or in VERIGENE

we into through that working So incorporate are that.

supplementary, flow The also have there. tracking what we are we

Obviously, I mentioned one what -- in script. I are I feeling should we my we think it mention in so, well very we're doing. and And thing

FDA We the to -- by of some be to able nicely. this by month. the the submit doing EUA Hopefully, testing. it progressing are serology It's we'll end

that learning using our a the on of time serology. matter testing will to fact, customer start a As we're all technology pass xMAP

to what For that and they are of example, try just script. mention eventually the testing why playing offer York, IgA the believe for serology. that's a published specificity earlier our testing sensitivity. to be but internally in today also we the know antibodies state I that's are also in developing better or in key the because submitted. directly beauty be that's serology test my something we they market, today IgG, New testing bring partners. that our on fundamentally And look at mainly either the they FMXD, they paper xMAP I and We They are white into IgM both can the in technology for to

you. Thank

Brian of Our question next from William comes Blair. Weinstein

open. line Your is

Hi, the do start side, those then guys, what actually business? driving questions. sit in add then the assay Thanks look some think And little quarter sample-to-answer how placements for on you those thoughts the off, as Brackmann on in? color this a Maybe Brian. for to can the the more of sales and on future around about taking institutions for you Andrew is maybe we forward, new sorts bit

Yes. I I mean them was rental. And that Andrew, what's of nice is to this okay? actually one think XX% mainly so, hospital, reagent

for to three technology. committed customer use years the mean it's our So,

COVID, long- to that. the see they need the for more term going committed into only they've not it's So system and

us from it's So strong us for they very so creating annuity basically forward. a units, many placing going

for system or purchase XX% COVID-XX was of also there Obviously, about tests. them other

I April. are strong already outside for also we in of of we system in some the saying, -- a placing last system. than the giving, as are I And see more them demand them must not years, we the say, are But a keep are USA, in USA. Some not few very

selling either, we is are or for we it long-term. terminology Our are contracting

different that. years April very it's create slightly eventually how So annuity will But looking instrument very, at strong I stream a in for of month some for strong a us way to of And that a was also as said, competitors our fairly come. us.

be on then panels that follow-up. pricing and expanded able have And we as I one NxTAG more think just to on pricing Thanks. guys capture VERIGENE just them, the benefit for about then with on might SARS-CoV-X the one Okay. those. And you

the while selling exactly the something, it XX extraction NxTAG-RPP started with we and are the when mean an I the NxTAG-RPP, LDT the we like Yes. that was ARIES, around was that's price. $XX, initially cassette in a because

[indiscernible] pricing, $XX testing. ARIES have which around we for Now, is in $XX, those cassette

sort the of sensitivity was to kitted sort Okay. But that Thanks. targeting And of product by last end have you last think should of just then specificity like and of you the to how about around something month. the of It for Thanks. for the going that you're on serology, level follow-up the minimum questioning are we line product? guys the one a guys. sounds

when but want we'll at stage, state for I okay? at unique keep it assume stage, want I to about comment But as sure, don't and technology you sensitivity. this high high don't EUA, saying, I the specificity that. submitted the this talk to Also we is should

do. So our technology came can -- also look can publication popping it around at start what you and up some that

that. reference So to might a that's be

Okay. Thanks, guys.

to doing let have We testing testing. start mean, I are you serology mentioned, just a when already doing we serology going customer today. understand, you

do something testing. used is we serology move the Luminex available But we have may forward. already to technology being So as

script, in Not been brand development. I used, development, only as said vaccine serology, it's the for

Technology daily start names the see using know serology investigation. of you the news in of their Luminex a using for we testing But part said, in that CNBC, xMAP as Luminex. you state all the York Harriss basis as So sure, see on New

Thank you.

Our of next question comes Jefferies. from Brandon Couillard

open. is line Your

I of if contribution it finer you the terms specific quarter. revenue COVID-XX could you product see point Harriss, was the curious any put to expect second in in

expect today capacity test tests of ramping Is XXX,XXX on XXX,XXX with number about to June. you consistent a talked monthly to actually the sell basis? that by You

our to increased capacity to address the potential significant for in able So, need. be obviously, we increase

can tick than products but COVID capacity weighted for you see volume. are bead-based quarter a significant is second technology the discussion assay that The up think is is technology. of we expecting which same, COVID-based is the I pretty pricing in from the more a toward our in our products, have it a today not covers ARIES we that roughly comments certainly NxTAG, total all revenue the capacity just that are molecular products. The that

recall, of the lastly, Homi comments, in we product quarter, mentioned this didn't from the very the COVID standpoint, until And first a a and in COVID-specific you'll quarter. end his then, available have

that quarter, lift COVID-specific everything, So attributable In to we up but in effort tick rule-out revenue COVID. ruling COVID expect expect in all the continue, from is we to to out the certainly but products related some also people was that well. second as

us But including VERIGENE as beginning not of as okay? during give it get capacity soon extra the the product testing will in course. we XXX,XXX, line, in of or VERIGENE QX, And the

investment that the understand if spend additional originally flat. guidance. top-line just your growth? accelerate from projects of the you're year the backing the expenses you at in And a looking OpEx if bit in you're P&L, But roughly or Okay. year full to look Curious, of expecting being about light for talked we kind

hiring mean, we because obviously, we are are XX/X. people working almost shifts now Look, three I manufacturing

if as manufacturing look but be will CapEx. year looking be COVID a argument, vaccine be capacity start but add, If we additional start at, into time, will reflected we behind of we we'll what longer And will until in the a technology that's a to with matter nine you there other gross at to will So on we us two, for term example, be or need months look six do happen for margin, which in same we or put the or months. just implemented. we of believe that in example, putting mainly in

dollars overall, of for investment okay? couple automation really continue under in flat be control. of mainly, That's million will facility to We your are OpEx to But or calculation. looking out add our

Thank the next comes with Tycho you. [Operator Our Instructions] Peterson from of line question JPMorgan.

Your line is open.

for is for taking questions. Hi. Thanks Eleni This Tycho. our on

Hello.

So percentage, first, to continue that you that guide, your are less is what of drive drivers noted of noted in in XQ? decline, there terms as but cytometry T-cell less expected else Is flow XQ. to XQ primarily your XQ your or appreciate than function versus underlying is easier will a about forecast? talk decline it of a anything an you Can a comp

China it's start got close No, because that with And earlier, we start and we with. that, impacted that, reopening I we are revenue also mainly have that we installed. as X anticipating -- to not as have in China unrecognized at look million said to of we

an we installation. So that demand not for seeing start academic, will also other are institutions. seeing And

revenue. our be small decline, number than overall flow our it's on you're cytometry but because again, is that will So at overall, less total very less for it a the feeling whole XX% small is looking relatively contributor,

the quarter, year be to quarter year of in it than first first the over million in last in only and in harder revenues second clear, an quarter it's XX because last XX the comp And million. quarter were were the they is second

beginning. So must revenue be is which down, going not the declining, means to you as at alluded going percentage the up the your in is comment flow up, going number

get you sure arrows to as laying So I in want make all you're this the direction pointed right out. your

COVID. we've CMS who and week lately, respiratory comment last Can respiratory tests, the of some of panel. then you And the order can developments from order terms namely the of on recent expanding another had scope I heard in of coverage requesting AMP think the that other question that you infections for when doctors and recommending coverage could panel test we CAP letter panels CMS coverage for expansion expansion? CDC as is joint as respiratory to news if for to respiratory testing the And see well

reimbursement certainly the to for So up overall you expect testing. go rate would

technology little see a our tests adopt labs that labs to use benefit as profit alternative, volume other a realize certainly expanded we priced than the certainly tend well. as our that of and actually across allowed from because our order that benefit today. the better be lower can the then overall actually Given that of testing that all they increase, our that position of constituents would of it, Should because the are technology can we platforms to level expansion

can you. done you month? about Great. solution get by to lastly, Thank your And this before of you talk is FDA the to what submit serology left end

What to be is for done serology? left

Yes.

here internal and That's More testing doing and are what what we we doing. that's are and there. validation

Thank you. the At over Shamir Homi time, I'd remarks. this call turn closing like for to to Sir? back

future, maybe Thank for earning and look you, the in call. with thank We everyone Latif, you your attendance you very speaking forward on you our near but you. near Thank seeing very future.

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

You may now disconnect.