Perfect. All right, great! So, perfect. Thank you, guys, f or all attending here. My name is Timothy Daley. I am the life science tools analyst here at Wells Fargo. We are, you know, very happy to have Bio-Rad here with us for a fireside chat. You know, I am joined here by Norman Schwartz, the President and CEO, and Ilan Daskal, CFO. So, you know, with that, we'll kick it off. You know, if we have a few minutes at the end, I might open up to the audience. I got a lot of stuff here, so you know, if nobody's got anything, we'll just keep running through. But so, you know, just I guess to kick things off, you know, lots of month-to-month volatility across both geographies as well as end markets. So, you know, it would be great if you guys could just give us an update on, you know, how August demand trends, you know, came in. You know, did things sequentially on a month-to-month basis improve, get worse? Anything stand out, in particular? Well, obviously, a lot of things are going on in our markets. I think that, you know, in my mind, we're still seeing some of the effects of COVID and kind of readjusting to a normalized world. I think, and certainly in kind of headlines, it's been the kind of small biotech and some of the more exacerbated funding problems that those folks have had of recent. That compounded with the large biopharma, which we also supply, and them kind of being in a kind of a destocking, restocking mode, kind of coming back to normal. That's been an effect, and then certainly all the goings-on in China. I think those are the three major factors that I see that are kind of continuing to affect the business. You know, and of course, you know, things go up and down on a monthly basis. But luckily, we don't report monthly. But so- Yeah. No, we know. So I think we're, y ou know, obviously, we'll get through it. I think that, you know, if you look at our markets in general, they're good, stable, long-term markets. I think that's really important to understand, both in the life science research area and in diagnostics. You know, so it's just kind of working through the ups and downs. Okay. No, that's helpful, and, yeah, I know you guys wouldn't, but we would love it if you reported monthly. But, you know, you guys have about 10% exposure to China. You know, yesterday, we had some of your peers and some interesting commentary kind of evolved, some new themes. You know, something new, I guess, was this anti-corruption push within China. Just curious if you've gotten any feedback from, you know, boots on the ground operations over there, if there's any, t hat's having a dynamic, if you're, they're hearing about it, if they're seeing it, just, you know. Yeah, not too much effect for us so far. You know, obviously, it's a good thing if the government can really kind of squeeze some of the corruption out of the country. I think that would be great. Maybe squeeze some of the kind of the marginal distribution out of the system. I think that would be even better. Yeah, we described, you know, we described in the last earnings call on the Life Science side. We do see some headwinds as part of the funding environment, et cetera. For diagnostics, we still see, you know, a nice kind of demand in terms of hospital demand for instruments. That was our kind of call-out in the last earnings call. So it was encouraging, kind of, to see a continued kind of demand for diagnostics. Okay, that's helpful. And, you know, if we do think about, you know, diagnostics demand, we've had this kind of pent-up demand of return to healthcare, if you will. Seeing that in Western markets and obviously China, pretty meaningful, given the extent of the lockdowns there. You know, how long do you think this kind of strength in China diagnostics, you know, above trend, lasts for as we work through that? Well, I think that you know, China's been building out a kind of a healthcare system, so from my perspective, I think it's a fairly sustainable situation. And certainly coming out of COVID, I think that you know, people are coming back, more elective surgeries, those kinds of things, so it's, you know, I think we're pretty much back to normal in the world. I think one of the pluses of COVID was that there is a really increased appreciation of the value of diagnostics overall, and so I think that's good for the future. Okay, great. And then, you know, just to, I guess, broaden the scope a bit, away from the immediate term to more of the guidance here. So if we were to think about the roughly 4.5 currency-neutral revenue guidance for fiscal year 2023, you know, where does China fit in that? Like, what is the China assumption, you know, even if you could break it down to diagnostics? Yeah. The assumption was, as I mentioned earlier, you know, life science still, you know, facing some headwinds in, again, specifically when you think about the smaller biotechnology kind of funding environment. Diagnostics continues to do well in terms of the instrument kind of placement. And that was, you know, the assumption, through the year. You know, when we think about the funding environment, we think this is a one-to-two -year cycle that will continue in terms of the headwinds. Even though we do hear, you know, that the funding environment is getting better, I'm not sure that it does translate immediately into kind of, you know, environment that, you know, those smaller companies are spending everything that they are able to raise or at the same pace that they used to spend before. So that again is a one-to-two-year kind of cycle. That's the way we think about it. When it comes to diagnostics, the new instrument placement is actually encouraging for us also from a margin perspective, despite the fact that it is headwind to margin this year. We do anticipate, you know, the pull-through of reagents to start sometime next year, and that is obviously a tailwind to the margin. Okay. All right. That's helpful. And, you know, just want to dig in that one-to-two-year cycle comment here. You know, was that broadly, was that any, you know, geography? Was that biotech versus pharma? Just, you know, help us understand that one-to-two-year cycle and- That is more with the biotech and the smaller kind of biotechnology companies. When it comes to pharma, specifically in the bioprocessing, we think about it more as a push-out, you know, of, you know, as associated with the destocking kind of environment. For next year, we hope that it will be kind of back to a normalized level. You know, it's going to continue to fluctuate, you know, over the quarters, but we on the other hand, don't anticipate, you know, a pent-up demand either. Okay, got it. And this is something I've been talking to investors a lot about is, you know, as we have this period of softness, obviously sets up easy comps, but, you know, if we think of multi-year stacked growth rates, you know, just let's isolate, you know, the Process Chrom business. Should we basically kind of model stable multi-year stacks, or are we, you know, in this period of time, you know, kind of dipping below and then returning to trend line? Just thinking about, you know, the rebound on the back end. For Process Chrom specifically, right? Yeah, for Process Chrom. Process Chrom, I mean, we haven't changed our thinking in terms of the multi-year kind of growth. I mean, you know, a nice, you know, double-digit kind of growth, you know, on a multi-year basis. Again, it will most likely continue to fluctuate, as I mentioned earlier. But in terms of the multi-year trajectory, you know, it's one of the verticals that, you know, we called out, back at the Investor Day last year, and we have not changed our thinking in terms of, you know, the long-term growth for that vertical. Okay. That's helpful, and, you know, so unchanged expectations for some of that. You know, again, let's dive into the other maybe major growth vertical in digital PCR. You know, how is that going? You know, can you give us kind of a state of the union of the market, how you guys think about it, competitive dynamics, and the ultimate holy grail of clinical application? Yeah. Maybe kind of step back a few years when we started on this. You know, we kind of thought that maybe, you know, a TAM of a couple of hundred million would be a kind of a good number to shoot for. I think we've been very pleasantly surprised to see the growth in the applications, you know, and the breadth and depth of those applications over the years. You know, all the way from tracking down pythons in the Everglades to being the kind of the tool of choice for cell and gene therapy. I think we've been, again, pleasantly surprised at the value of the technology to science. You know, I guess if I think about it, a little over 6,500 kind of peer-reviewed papers that kind of referencing ddPCR, and I, you know, I think that does portend well for the future. T hat does tell us that it's a valued technology. And as you asked, you know, what about future applications? Yes, we are looking at applications now in the diagnostics arena. Obviously, you know, with the focus on oncology, there are potentially great applications in oncology, and we're starting out with NIPT as our kind of really our first target in diagnostics, developing a kind of a near-term and a longer-term platform for that, the women's health market. Okay, great. You know, in thinking kind of those two, you know, the growth sectors here and thinking about the updated 2025 guidance, you know, kind of, I guess, what is assumed in there for the next two years for, you know, if you want to combine ddPCR and Process Chrom or break them apart and rest of business, if you will, how should we kind of bridge that today? Sure. You know, it's interesting. We are at that juncture that so many kind of inputs we have to embed into 2024 kind of assumption, right? That kind of what led us to kind of park the 2025 guidance kind of in a holding pattern until we get a little bit better visibility into 2024. High level, you know, for the most part, it does depend on the top- line growth. If you recall, you know, again, from our investor day last year, the fall-through from the top line, you know, especially, you know, associated with our underutilized manufacturing footprint, we benefit a lot, you know, in the bottom line when it comes to a top- line growth. So, it does not change our thinking in terms of the growth drivers. We called out, obviously, the ddPCR, we called out the Process Chrom, you know, we called out, you know, the quality control. So, you know, the growth drivers on a multi-year kind of perspective, did not change our thinking in terms of, you know, the long term. Specifically for the next two years, there is a lot that is going on, you know, on a geographical basis, on the macro side, that hopefully in the next few months we'll get a little bit better clarity how to think about 2024, and that will drive, you know, obviously the outcome for, what does it mean for the goals for 2025. Okay, well, that's helpful. And, you know, you mentioned the next few months hopefully getting more clarity. This is something I've been kind of asking every company is, you know, what are you thinking about on, you know, year-end budget flush dynamics, be it pharma, academic? Just, you know, what's embedded in the outlook, and when do we truly get visibility into if it's happening or not, or, you know, budgets are getting cut. Like, when do those conversations happen, and what's your visibility into those conversations? So, you know, we really don't, we really don't expect a budget flush this year. I think, you know, people are being fairly conservative in their spending, and so I don't expect people to go wild before the end of the year. And I think people are gonna probably be a little bit conservative next year. I think, you know, as we look at, like, NIH funding, it's projected to go up. That's the good news- Relative to what we were hearing a few months ago, it'll be fairly modest. I think that, you know, as a kind of a bellwether for next year, I think that's one. The Horizon program in Europe is still ongoing, still funds being invested there from that program. Yeah, and I think, of course, I think, you know, China in particular is still a little bit of a wild card. Okay. We still anticipate, you know, though, the fourth quarter to be stronger. Seasonality, you know, for us, the fourth quarter in most years is a stronger quarter, relative to the, you know, second and third quarter. But obviously, it doesn't change the dynamic that Norman mentioned, but we do anticipate it to be a stronger quarter. Okay. In thinking about, you know, instruments versus consumables, is there any kind of historical rule of thumb of, you know, what percent of your instrument revenue delivers in the fourth quarter? So let me address that on a kind of a macro basis rather than a quarter-to-quarter basis. You know, I think especially this, this third and fourth quarter are a little bit of an anomaly, in that, you know, we're kind of working down backorder, and so probably a little heavier instrument mix, especially on the diagnostic side now. But overall, if we think about the kind of the mix of, of what I call consumables versus hardware, you know, for our two businesses, it's roughly a 70/30 mix. With 70% being the kind of recurring revenue in some form and 30% being kind of less recurring. Okay. I appreciate that. And, you know, wanted to dive into margins here. You know, always a, you know, topic of debate or, you know, upside potential in, in your guys' margin profile versus, versus peers. I know you've talked about, you know, leveraging the fixed capacity that's already installed, fixed overhead already in place. Recently, you've been maybe more open to doing a larger deal to facilitate that utilization increasing. Just, you know, could you update us on, you know, the M&A pipeline? I know you guys have talked to, you know, a bit larger than in the past. Things are maybe cheap. Just, you know, any update there on that capital side of capital allocation? Yeah, a lot of directions you could take that. But I think that the way we've looked at it is, you know, over the last several years, we've been kind of spending a lot of time and effort internally, kind of doing a big reset, kind of functionalizing the organization. Getting some critical tools in, like a global ERP system, to be able to scale the business. We've gotten ourselves pretty well through that, and now I think are increasingly comfortable with doing something larger, that we feel we could very successfully integrate into the system that we have, with the people that we have. There is a little more of an appetite to look at something. You know, a little larger, because we've been doing in the past few years a lot of these very small tuck-ins. You know, the question is always the right opportunity and the right fit. We're always looking for something that's very complementary to what we already do, as opposed to, you know, something kind of way off the grid for us. And, you know, we've always got a few things we're looking at. So we'll see. Okay. And I would also call out, you know, in terms of valuations, you know, the smaller tuck-ins are still expensive. I mean, they have not adjusted to the current environment yet. Obviously, the larger, especially the public companies, are kind of, let's call it, automatically are adjusted, you know, to the new environment. So, it's kind of in more realistic valuations. In terms of financing, you know, we have a very strong balance sheet. We will try to use, you know, as much cash as we can, obviously, since we do believe that our share is, you know, underappreciated. So we'll try to minimize kind of the usage of equity. Okay, yeah, and that is something I kind of wanted to get into next is, you know, the valuation itself. This is a big debate. Structurally, if you can clean up the numbers a bit, you know, the multiple becomes a lot more interesting than what just screens on Bloomberg or FactSet. So, you know, how should you, or how do you think internally about valuation and how your own exercise of building out a, you know, valuation of the company on a clean basis, if you will? You know, obviously, it should, and it does deserve, you know, the traditional multiples. And today, obviously, it is, in our opinion, you know, grossly underappreciated. You know, when you start to think kind of what potentially the factors are, you know, one factor could be that the Sartorius investment, you know, there is some leakage when it gets to our balance sheet. Obviously, you know, the accounting, they changed back in 2018, and it's a little bit more challenging for some investors, you know, how to bake out, you know, the valuation. And is the leakage on the Bio-Rad side or on the Sartorius side? I mean, it depends who you ask and how you think about it. But that's one, you know, aspect that is out there. I think, you know, the second aspect is so, is associated with our, you know, multi-year kind of growth and transformation. I think for that, we are still in the mid-innings, in achieving all the goals that we did set to ourselves. And, we have done and achieved a lot in the last, you know, several years. But I think, you know, some investors are waiting to see kind of the next phase of this growth and improvement. So I would call out, you know, those two as probably the major kind of aspects that, you know, we think about when we look at kind of the overall valuation. Okay, great. You know, as we're thinking about Sartorius, stake's been built over a long period of time. Obviously, you guys have done and executed, you know, in line with expectations, your multi-year programs, you know, the three phases so far. So, you know, if we think about the longer term, next phase of the company, you know, I get this question a lot on succession planning. You know, any kind of update on this front, Norman? Just, you know, given i t is pretty topical. Yeah. I mean, I think that, you know, I think I've still got some energy and a few years. But if I would happen to get hit by a bus, I think that we've got certainly good internal candidates. And obviously, the board would have to kind of meet and kind of figure that out, and look at, you know, probably internal and potentially external candidates to fill the role. But we've got, you know, a really good management team in place overall, so feel pretty good about that where we are. Well, that's helpful. You know, just thinking about some of the, I guess, hotter topics outside of the headwinds, thinking about the tailwinds here, you know, lots of buzz around spatial proteomics. You know, academic, government, and market is very strong here. You know, how are you guys participating in these markets? You know, ambitions there, general update size? Yeah. So, obviously we're, you know, we probably invest a little more than most of our, peers in R&D. So trying to drive t hat innovation as much as we can. T here are just so many things going on in our markets. You know, we really are in the golden age of biology, and s o there are lots of things to do, lots of things to look at. I think for us, you know, it's picking those targets carefully, picking the ones that we think have good long-term potential, and where we think we can really contribute to the, to advancing the science. I think that's how we look at it. You know, things like spatial are obviously, it's a kind of an interesting growing area. You know, some other single-cell analysis, you know, in addition to the kind of things that we're doing with ddPCR. So, yeah, lots of potential. I mean, I think the trick for us is really keeping that focus, making those kind of choices, not getting too distracted by too many things, too many shiny objects. Yeah. Okay. And then, you know, just stepping about back a bit on academic governments, you know, obviously there was packages i n China in 2022, packages i n Europe in 2022 as well. You call that Horizon. You know, how long does Horizon, for example, how long does that, you know, continue to be a tailwind? Like, when does that money run out, you know, as it relates to you know, the products that you guys are getting, you know, purchased through that, those dollars or those euros, if you will? Yeah, I don't know exactly what the, what the remaining bucket of funds is, in that Horizon program. It was, it was pretty long-term program that was set up, and, and fairly large, as I remember. S o, you know, I think it, it certainly is, kind of a multiyear kind of a tailwind for us, and, it should be in Europe. And as we mentioned earlier, looks like, kind of a good start for next year with the NIH budget relative to where it could have been. I think, you know, the other kinds of funding institutions like Howard Hughes in the U.S. and other institutes in Europe and other places, you know, continue to be also supportive of research. And while the kind of the short term, near-term funding for biotech has been slower, I think there are kind of good signs of life. I was here in Boston yesterday and visited a number of early-stage biotech companies, and they're really, you know, really encouraged and kind of working hard to bring things to market. All right, great. You know, if anybody has anything in the audience, don't be shy. Otherwise, plenty, plenty more questions here. All right, great. So you know, diving a little bit back into, into China and the stimulus there, you know, we've seen the property stimulus come out in the last week. People always talk about how China's, you know, the government funds everything, so indirectly, directly, third derivative, what-have-you. You know, do you see any impact from that, just a shoring up of non-life science, non-healthcare realms, or do we need direct stimulus to kind of turn that market around? You know, I guess my sense is that, you know, while the federal government offers up these stimulus packages to the local provinces, these stimulus packages are typically in the form of loans. I think the local provinces seem to be kind of have too many loans already. So it seems like while there was a lot of excitement six or nine months ago about this big stimulus package, I don't think it's had very much effect. I don't think there's been a big uptake. Okay. And then, you know, any insights based on history of when, you know, a new package will come, or if, you know... I've heard someone yesterday was talking about maybe, you know, October or maybe the Chinese New Year are kind of those break points, if you will, or catalyst points of when the decision could be made to deploy some capital into the, you know, life science or healthcare sector. It is specifically for China? For China, yes. Yeah, I really think it's gonna depend on what the form of that stimulus is. I think it's too early to tell what the effect might be. Yeah, if you recall, six to nine months ago, you know, they announced kind of the grants. And these were not really grants, and, you know, our team, you know, I mean, immediately said, "You know, we don't have high hope, you know, if these are traditional loans." And reality was that it wasn't really utilized. I mean, so again, it depends what is the form and shape a nd how do they balance it with this anti-corruption kind of approach. And so it's kind of contradicting one another, so in a way. So we'll have to wait and see a few months. But generally speaking, you know, it seems like on a macro level in China, there is a lot that is going on, you know, on top of it, the real estate environment, you know, the youth unemployment. Inflation Inflationary kind of environment. So it feels like this is kind of a few years of a fix. It's not like a specific program that, you know, will fix everything, so we'll have to wait and see. It's going to be an interesting one. China is still the second, you know, largest economy in the world. Yep. Yep. Okay, now let's leave China for now. Yeah. I'm sure you guys are already sick of it this day. So, you know, moving to Western pharma biotech, you know, Norman, you mentioned that you're kind of working through some backlog of instruments right now. You know, are we in this period where effectively, you know, we're kind of just normalizing a trend in terms of pharma, you know, demand or spending, the whole spending pause, whatever you want to describe it as? You know, are we kind of just normalizing on tough comps or ordering trends, or are we truly in a slump right now? I guess my view is we're still normalizing. All right. You know, I think, you know, if you look at biopharma over the years and kind of the, you know, what's in phase II, phase III clinical trials. You know, it's still an extremely strong pipeline, and so I think it's still a very good place to invest for the future. I mean, for us, I, you know, we're still kind of somewhat under-penetrated relative to some of our peers. And, and, you know, we haven't taken our foot off the gas there in terms of continued investment. So, but we feel pretty good about that market. Okay, great. You know, the last few minutes here, I just wanna, you know, dig a bit deeper on the M&A front and, you know, the existing capacity. Is there, again, it clearly would be post-revenue deal if you're really trying to, I guess, fill capacity. Is it life sciences side, diagnostics side? I know that there's, you know, regulatory dynamics. It's harder to make some products in a diagnostics facility. Just could you help us understand, like, what would be broadly, like, a good fit to, you know, increase utilization quickly? Any, you know, rough markets or, again, as high level as you want, as low granular as you want. Yeah, you know, it's pretty broad-based. You know, it's cross life science and diagnostics. You know, in the life science area, it's probably, you know, kind of more looking at growth. And in the diagnostics area, it's, you know, probably more about kind of very sustainable cash flow in terms of kind of typical drivers. And, you know, it's basically what is complementary to what we do now? What can we drive through our sales forces? Are there opportunities where we can kind of in-source manufacturing and leverage our manufacturing footprint? Or again, leveraging our global distribution. So, you know, it's a combination of all kinds of things. Okay. All right. No, that's helpful. And, you know, just thinking about, you know, the new Singapore site, speaking of facilities, you know, how's that ramp going? You know, what should we expect out of that? Yeah, it's actually going pretty well. We've made that transition of the, I mean, we've had the Singapore site for many years. But we made a kind of a strategic move to expand that site, and move some of our French manufacturing operations to Singapore. That, I think, transition has gone very well. Obviously, these things always take a little longer than you expect, but generally, it's been pretty good. I think that, you know, we still have to kind of work down some of the duplicate inventory that we had from that. A nd I think, you know, we're starting to get the benefit of the labor arbitrage there. And I think for the future, we've got opportunities to get kind of component arbitrage from locally sourcing. So I think- The two sites in France are completely closed already, so that's a done deal. You know, in Singapore, we have enabled more capacity than we need today, which is good. I mean, that's for future growth. And in addition to the labor arbitrage that Norman mentioned, also the logistics, you know, is much lower i n terms of, you know, shipments and within Asia. So far, you know, it's trending as we projected. All right. Perfect. Right on time here. So again, thank you, Ilan. Thank you, Norman. Appreciate it. Thank you, everybody, for attending here. Hope everybody has a good, productive rest of the day. Thanks for having us. Of course.