Bio-Rad Laboratories, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Bio-Rad Fourth Quarter and Full Year 2023 Earnings Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Edward Chung. Please go ahead.

Thanks, Jenny. Good afternoon, everyone, and thank you for joining us. Today, we will review the fourth quarter and full year 2023 financial results and provide an update on key business trends for Bio-Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer, Andy Last, Executive Vice President and Chief Operating Officer, and Simon May, President of the Life Science Group. Before we begin our review, I would like to caution everyone that we will be making forward-looking statements about management's goals, plans and expectations, our future financial performance, and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans, goals, and expectations. You should not place undue reliance on these forward-looking statements, and I encourage you to review our filings with the SEC where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release. With that, I will now turn over the call to Andy Last, our Executive Vice President and Chief Operating Officer, to provide an update on Bio-Rad's global operations.

Okay, many thanks, Ed, and good afternoon to everybody. Thank you for joining us. The fourth quarter of 2023 performed largely as expected. reflecting a continuation of the macroeconomic trends started earlier this year in the biotech and biopharma segments, China, and geopolitical challenges related to Russia. However, revenue picked up nicely compared to Q3 in both life science and diagnostics, although as expected, we saw little in the way of budget flush in the fourth quarter of this year for the life science business. During the quarter, we smoothed out the remaining operational challenges associated with our SAP Go Live in Q3 in Asia Pacific. And we are now operating on a single global instance of SAP across all our operations. In life science, we experienced a double-digit core business decline compared to Q4 prior year, where we had challenging compares due to strong budget flush, backorder burn down, and we benefited from the launch of the QX600 DD-PCR platform. We were pleased with the growth of our clinical diagnostics business in Q4, especially in Asia Pacific where we prioritized placements to capture some strong growth trends, particularly in our diabetes testing franchise. We are now past our supply chain challenges and finished the quarter with a more normalized year-end backlog. Overall, our DD-PCR franchise had a soft 2023 with sales flat when excluding COVID as compared to the high growth we had previously been experiencing from our focus in biotech and biopharma. However, we remain very positive on maintaining our leading market share in the markets we serve and are looking forward to the impact of the QX Continuum launch as we expand our focus on the lower end market later this year. In addition, we continue to prioritize investment on application and assay expansion for the platform overall, with further launches coming during the year. Further, we're excited about the launch of several other new life science products this year, which include our next-generation ChemidocGo Western Block Platform and single-cell DDC sample preparation solutions. We were pleased with the Q4 finish for our clinical diagnostics business, especially double-digit year-end growth in Asia Pacific as a function of demand and priority placements, which helped us to deliver mid-single-digit growth overall for the quarter. During 2023, our teams worked hard on reducing our back orders in the clinical business, while bringing up Singapore to full production for the products transferred from France. We were pleased with the progress we made on our core franchises in quality controls, immunohematology, diabetes and autoimmune, net of the challenges in Russia and China. In Q4, inventory levels remained high and similar to Q3, continuing to reflect some impacts of our manufacturing transfer of clinical instruments from France to Singapore, and also lower demand impacting inventory consumption and life sciences. We continue to exercise tight cost control in Q4, and this included lower employee-related costs reflecting reduced incentive compensation accruals. Looking toward 2024 for our clinical diagnostics business, we anticipate a more normalized year for customer demand. We remain cautious on the pace and dynamics of recovery in our life science business. We expect the first half of the year to be a decline due to ongoing softness in biopharma and biotech and prior year compares. But anticipate improvement in the second half of the year as funding improves along with stabilization in the broader biopharma market. The pace and shape of recovery in China remains uncertain. but China remains a priority market for future growth for the company. Overall, we see 2024 as a recovery transition year with higher levels of uncertainty than usual for our life science business due to the anticipated second half improvements in biotech and biopharma and the bioprocessing destocking recovery. On the latter point, we entered 2024 with a softer order book for process chromatography than the last few years, mostly related to a couple of large customers, with at least one of our large customers still working off elevated inventory throughout the year. On a positive note, our process chromatography resins are included in five of the novel therapeutics approved by the FDA during 2023. In addition, we are excited about the go-live of our new Singapore DC toward the last part of the year, which supports ongoing logistics improvements in the Asia-Pacific region and globally for both businesses. On the operating costs front, we have continued to make improvements in our cost structure. However, we will see a material step up in cost in 2024, for employee incentive compensation accruals, which, along with annual merit increases, will create a meaningful cost headwind. We also expect to see ongoing tightening of sanctions against Russia, making conditions for meeting demand for our clinical business increasingly more challenging there. In closing, we continue to drive forward on our strategy with focus on execution on our priority market segments and platforms. investing in process and efficiency gains around our single global SAP instance, and maintaining our investment levels to drive innovation for our core platforms. Thank you, and I'll now pass you to Norman to review the financial results.

Okay, thank you, Andy. So first, I'd like to review the results of the fourth quarter and the full year. So net sales for the fourth quarter of 2023 were 681.2 million. It's a 6.7% decline on a reported basis versus 730.3 million in Q4 of 2022 and a 7.7% decline on a currency neutral basis. Similar to the prior quarter, the fourth quarter year-over-year revenue decline was primarily the result of ongoing weaknesses in the biotech and biopharma end markets, again, primarily impacting sales of our life science segment products. In addition, we continue to experience weak demand for life science products in China. I think both as a result of the macroeconomic environment as well as to some extent, the local made in China initiatives. COVID related sales in the prior year were 13.4 million and immaterial in the fourth quarter of 2023. Therefore, core revenue, which excludes COVID related sales, decreased 6.0% currency neutral. And then on a geographic basis, Currency neutral revenue decreased year over year in the Americas and Europe and was relatively flat in Asia. The sales of Life Science Group in the fourth quarter of 2023 were $291.1 million compared to $359.7 million in Q4 of 2022, which is a 19.1% decline on a reported basis and 19.9% on a currency neutral basis. Excluding COVID-related sales, the life science year-over-year currency neutral core revenue experienced a broad base decline of approximately 17%. In addition to the challenging biotech, biopharm and markets and soft macroeconomic conditions in China during the quarter, DDPCR and qPCR sales face difficult compares due to the backorder burn down and other factors Andy mentioned in the year-ago period. And when excluding process chromatography sales, The underlying life science business decreased 22.1% on a currency neutral basis versus Q4 of 2022. And finally, the life science group revenue excluding process chromatography and COVID related sales decreased 18.7% currency neutral. On a geographic basis, life science year-over-year core revenue decreased across all three regions. Conversely, we saw broad-based growth for the clinical diagnostics group. Fourth quarter sales of the clinical diagnostics group were $389 million compared to $369.6 million in Q4 of 2022. This represents a growth of 5.3% on a reported basis and 4.2% growth on a currency neutral basis. And then core clinical diagnostics year-over-year revenue, which excludes COVID-related sales, increased 4.3%. The clinical diagnostic group benefited from particular strength in diabetes product sales as well as from the reduction of elevated back orders. On a geographic basis, the diagnostics group revenue is primarily driven by strong growth in Asia. For the company, Q4 reported gross margin was 53.8% on a GAAP basis and compares to 54.4% in the fourth quarter of 2022. The year-over-year gross margin decline was due to a number of factors, including lower manufacturing volume, the impacts of inflation, and inventory reserves. Amortization related to prior acquisitions required and cost of goods was $4.5 million as compared to $4.4 million in Q4 of 2022. STNA expenses for the fourth quarter of 2023 were $207.1 million or 30.4% of sales compared to $212.2 million or 29.1% in Q4 of 2022. The lower SG&A in the quarter was mainly due to lower employee related expenses, partially offset by a weaker dollar and a facility lease impairment. And total amortization expense related to acquisitions recorded in SG&A for the quarter was 1.2 million versus 1.7 million in Q4 of 22. Research and development expense in the fourth quarter was 63.9 million or 9.4% of sales compared to 66.2 million or 9.1% of sales in Q4 of 2022. The lower expense levels reflect both lower employee related and project expenses. Fourth quarter operating income was 95.3 million or 14% of sales compared to 118.7 million or 16.2% of sales in Q4 of 2022. And looking below the operating line, the change in fair market value of equity security holdings, which are substantially related to Biored's ownership of Sartoria's AG shares, added $324.3 million of income to the reported results. During the quarter, interest and other income resulted in net other income of $8.8 million compared to net other expense of $6.1 million last year, primarily driven by increased interest income from investments. Effective tax rate for the fourth quarter of 2023 was 18.4% compared to 24.2% for the same period in 2022. Tax rates for both years were driven by unrealized gains in equity securities, and the lower rate in 2023 was primarily a result of changes in the geographical mix of earnings. Fourth quarter reported net income was $349.7 million or $12.14 diluted earnings per share compared to net income of $827.7 million or diluted earnings per share of $27.78 in Q4 of 2022. This change from last year is again largely related to changes in the valuation of Sartorius Holdings. So moving on to the non-GAAP results. On a non-GAAP basis, we have excluded certain atypical and unique items that impacted both gross and operating margins as well as other income. These items are detailed in the reconciliation table in the press release. So looking at the non-GAAP results for the fourth quarter. In cost of goods, we have excluded $4.5 million of amortization of purchased intangibles and a small restructuring benefit. These exclusions move the gross margin for the fourth quarter of 2023 to a non-GAAP gross margin of 54.4% versus 54.9% in Q4 of 2022. Non-GAAP SG&A in the fourth quarter of 2023 was 29.8% versus 28.5% in Q4 of 2022. In SG&A, on a non-GAAP basis, we've excluded amortization of purchase intangibles of 1.2 million, an in vitro diagnostics registration fee in Europe for previously proved products of 1.8 million, and $851,000 of restructuring-related expenses. Non-GAAP R&D expense in the fourth quarter of 2023 was 9.1%, basically the same as 2022. You know, R&D on a non-GAAP basis, we have excluded $1.3 million in restructuring expenses and $400,000 in acquisition-related costs. And the cumulative sum of these non-GAAP adjustments result in moving the quarterly operating margin from 14% on a GAAP basis to 15.5% on a non-GAAP basis. And this non-GAAP operating margin compares to a non-GAAP operating margin of 17.4% in Q4 of 2022. We've also excluded certain items below the operating line, which are the increase in the value of Sartorius Equity Holdings and a loan receivable of $324.3 million and a $965,000 loss on venture investments. The non-GAAP effective tax rate for the fourth quarter of 2023 was 22.4% compared to 28.1% for the same period in 2022. The lower tax rate in 2023 was primarily driven by the geographical mix of earnings and a release of reserves related to resolution of certain tax positions. And finally, non-GAAP net income for the fourth quarter of 2023 was $89.3 million or $3.10 diluted earnings per share compared to $98.5 million or diluted earnings per share of $3.31 in Q4 of 2022. And now for the full year results. Net sales for the full year of 2023 were $2,671,000,000, which is a 4.7% decline on a reported basis as compared to $2,802,000,000 in 2022. On a currency neutral basis, full year 2023 net sales decreased 4.1%. COVID related sales for the full year were about $4 million compared to $109 million in 2022. So that core year over year revenue which excludes COVID related sales decreased 0.4% or effectively flat on a currency neutral basis. Now looking at full year sales results by segment. Sales of the Life Science Group for 2023 were $1,178,000,000, a year-over-year decline of 12% on a currency-neutral basis. When excluding COVID-related sales, Life Science year-over-year currency-neutral core revenue declined 4.9%. The maturity of the year-over-year decline was driven by process chromatography, QPCR products, and Western Block. On a geographic basis, life science currency neutral, full year core revenue, which as a reminder, excludes COVID sales, declined in Asia and Europe, while the Americas posted modest growth. Sales of the clinical diagnostic products for 2023 were $1,489,000,000, which represents a 3.2% growth on a currency neutral basis. When excluding COVID-related sales, the clinical diagnostics year-over-year currency-neutral core revenue growth was 3.4% and was driven by our diabetes, quality control, and blood typing products, partially offset by a decline in infectious disease products. On a geographic basis, clinical diagnostics, currency-neutral four-year core revenue growth grew across all three regions. Overall, company full year non-GAAP gross margin was 54.2% compared to 56.6% in 2022. The year-over-year margin decline was driven mainly by product mix, lower COVID sales, inventory reserves, and lower fixed cost leverage. Full year non-GAAP SG&A expense was $814.6 million or 30.5% of sales compared to $805.4 million or 28.7% of sales in 2022. The higher SG&A was related to SAP implementation in Asia, legal fees, a lease impairment, and higher discretionary spend partially offset by lower employee related costs. Full year non-GAAP R&D was $254.8 million or 9.5% of sales versus $256.7 million or 9.2% of sales in 2022. And full year non-GAAP operating income was 14.2% compared to 18.7% in 2022 which reflects the effects of revenue decline, shifts in mix, and lower fixed cost absorption. And lastly, the non-GAAP effective tax rate for the full year of 2023 was 22.3%, consistent with our guidance range and compares to 22% in 2022. So moving on to the balance sheet. Total cash and short-term investments at the end of 2023 was $1,613,000,000 compared to $1,796,000,000 at the end of 2022 and $1,765,000,000 at the end of the third quarter of 2023. The change in cash and short-term investments from the third quarter of 2023 was primarily due to share repurchases, working capital, and the timing of tax payments. Yesterday, just to mention, we concluded a new $200 million credit agreement maturing now in February of 2029, which provides additional liquidity and enhances Bio-Rad's financial flexibility. And this new credit line replaces a prior $200 million facility that was maturing in April of this year. Inventory at the end of Q4 increased slightly to $780.5 million from $775.8 million in the prior quarter and was primarily due to a higher level of finished goods. As we move on from the supply chain challenges of the past two years, we continue to anticipate inventory decreasing to more normal levels over the next six to eight quarters. For the fourth quarter of 2023, net cash generated from operating activities was $81 million, which compares to $79.7 million in Q4 of 2022. This increase mainly reflects changes in working capital offset by the timing of tax payments. For the full year of 2023, net cash generated from operations was 374.9 million versus 194.4 million in 2022. This increase mainly reflects changes in working capital. During the fourth quarter, we purchased 659,000 shares of our stock for a total cost of $200 million, or an average purchase price of approximately $303 per share, as we continue to be optimistic with our buyback program. Probably useful to note, we still have nearly $280 million available for share repurchases under the current board authorized program. And further, just so you understand, full year share buybacks totaled 1,268,000 shares for approximately $429 million. Again, that's for the year. As a comparison, we purchased about 479,000 shares of our stock for $216 million in 2022. Adjusted EBITDA for the fourth quarter of 2023 was $136.8 million, or 20.1% of sales, and adjusted EBITDA in the fourth quarter of 2022 was 21.4%. Full year adjusted EBITDA, including the Sartorius dividend, was $535.9 million, or about 20.1%, compared to 23.8% in 2022. Net capital expenditures for the fourth quarter 2023 were $42.1 million, and full-year CapEx spend was $156.5 million. And finally, depreciation and amortization for the fourth quarter was $37.2 million and $145.9 million for the full year. So, moving on to the non-GAAP guidance for 2024. As Andy alluded to earlier, we do see 2024 as a recovery transition year. with higher levels of uncertainty than usual for our life science business, and a steady growth outlook for diagnostics. Given the operating expense headwinds and muted revenue growth, I think it's fair to say that margin expansion will be difficult this year. Keep in mind that employee-related expenses impacting our P&L represent somewhere between a 250 to 300 basis point headwind that we need to overcome in 2024. And we have continuing geopolitical issues, especially as it relates to China and Russia. However, as we remain focused on improving our cost structure, we are well positioned for operating margin leverage and as revenue growth returns. Again, I think 2024 is certainly very different to a normal year. This year revenue is expected to be a bit more back-end loaded than usual based on the anticipated recovery in biotech and biopharma. Consequently, we do expect soft gross and operating margins in the first half of the year. particularly in the first quarter with improvements in the second half, kind of in line with the market recovery and revenue normalization. So with all that as a kind of a preamble, here's how we see the year rolling out. We're guiding a currency neutral revenue growth in 2024 to be between one and two and a half percent overall. The life science group, year-over-year currency neutral revenue growth is expected to be between 0% and 2%. And for the diagnostics group, we estimate currency neutral revenue growth to be between 2.5% and 3%. With the backdrop of working through elevated back orders in the last year, we realized a little over 1% from price improvement at the corporate level. which was below inflationary trends to our overall cost. We are targeting to achieve a similar level of price realization this year, mainly through the life science group. We'd also like to call out the sale of a non-core contract manufacturing business in December that was part of a prior acquisition. This business This reported under other operations contributed revenue of $3 to $4 million annually, but had really an immaterial impact on our overall financial results. Full-year non-GAAP gross margin is projected to be between 54 and 54.5%, with study improvement anticipated throughout the year. Gross margin for the first half of the year is expected to be below the full year range, with the second half anticipated gross margin recovery driven by improved sales volume. Full-year non-GAAP operating margin is projected to be between 13.5% and 14%. We estimate the non-GAAP full-year tax rate to be between 22% and 23%. And CapEx is projected to be approximately 160 to 180 million as we continue to invest in our infrastructure to support our multi-year growth strategy. And finally, full-year non-GAAP EBITDA excluding the Sartorius dividend is expected to be between 18.5% and 19%. And when we include the recently announced reduced Sartorius dividend, the adjusted EBITDA is expected to be between 19% and 19.5%. So in concluding today's prepared remarks, just a few comments on BI-RAD's ongoing corporate transformation and key accomplishments, maybe a little bit as a baseline for 2024. I would say in spite of all the macro variables You know, we feel we have a good, realistic outlook for 2024. You know, we're clear of the pandemic. We've resolved our supply chain constraints. We successfully transitioned key diagnostics platforms to our Singapore manufacturing facility. We completed our global SAP implementation. And I think most important, we continue to make progress on our journey of transformation. In addition, as Andy mentioned, We have a number of exciting products in our pipeline to help us drive 2024 as we look forward to our life science markets recovering later in the year. Certainly looking back over the last four years, I think it's important to note that our underlying business has grown at a currency neutral compound rate of 4.6%, including I might mention life science, which has grown at over 8%. Overall, I think we feel good that we're making solid progress, and I do think we have a lot to look forward to.

That concludes our prepared remarks, and we will now open the line to take your questions. Operator?

Yes, thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please flip the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Patrick Donnelly from Citi. Please ask your question.

Great. Thanks for taking the questions, guys. Norman, I guess this would be for you on the margins. Just in terms of the ramp throughout the year, can you just talk about the moving pieces? It sounds like the incentive comp is obviously going to hit pretty hard here in the first half. Is it a bit of the Singapore ramp picking up steam in the second half? Is it volume leverage? Maybe just talk about the cadence and the ramp of that margin story throughout the year here and just kind of how we should think about the base.

Yeah, I think it really has the most to do with the sales volumes. We get a lot of leverage from the sales, and I think we should see the margins ramp with sales.

Okay, understood. And then just on the CFO search, maybe can you provide an update of where we stand, timing when that could happen? We've got a few questions on just a little bit of an update there would be helpful.

Yeah, we're really making good progress. And candidly, we're hoping to have a new CFO on board by the next earnings call.

Okay, all right, next few months. And then maybe one last one, just in terms of the outlook on China, just how you guys are thinking about that region, both in the life science and diagnostics, I know it's maybe two different stories there. So yeah, just kind of let us know what you're seeing there currently in each segment and the expectations for 24 would be helpful.

Yeah, I'd say near term, it seems to be kind of a tough market. Not many signs of immediate recovery and a little bit of uncertainty, I think, as to when we will see that. I think that the good old days of double-digit growth in China, I don't see that in the foreseeable future. You know, for a life science business, you know, I think we've seen the, you know, the impact of, combined impact of, you know, the in China for China, anti-corruption, and in general, kind of a tough funding environment affecting the business. For diagnostics, I think the, you know, we're continuing to see steady growth. But we do also continue to kind of carefully monitor the situation with these value-based pricing tenders, wondering if that may spread to some of our platforms or some of our more specialty products from the kind of higher volume products that have seen that in the short term.

Understood. Thank you, guys.

Thank you. Your next question is from Jack Meehan from Nefron Research. Please ask your question.

Thank you. Good afternoon. First question I wanted to ask about the life sciences business. Can you talk about, you know, so in the script you talked about how the PCR and DD-PCR businesses kind of saw some backlog burn down. Could you talk about how long you expect this to persist in 2024 and when that might start to turn the corner?

Yeah, this is Simon. I think we're really largely through the backlog burn down compares as we head into 2024. I think the short answer is the slate's pretty clean now. We've obviously got a bunch of other macro conditions impacting the business, as we referred to in the script, and the H1 versus H2 contrast. But as we're sitting here today, we don't see backlog burn down as an issue going forward.

Yeah, the callout, sorry, just to add on, Simon, the callout was against the 22 Q4 compares where had a meaningful contribution from backlog burn down.

Got it. Okay. And then I was curious how process chrome played out in the quarter versus your expectations. I know you talked about starting the year with lower backlog there. Were there some larger than expected shipments in the quarter?

It's Simon again. I think at a macro level, we saw the conditions that we've been talking about all year with destocking continue to persist. as I think Andy called out in the script, as we enter Q1, our order book remains softer than we've seen it in previous years. I guess the follow-on question there is about, are we seeing any green shoots? And there's certainly a lot of tentatively encouraging data starting to emerge as we look at our customer base. I think we're seeing that a number of our customers we're really anticipating are going to be through the destocking impacts in 2024, and we'll see something like a return to normality. But at the same time, we've got some larger customers who all the indications are they're not going to be through it. And so I think that's going to net out to be tentatively we'll see some recovery in the second half, but there's still a fair amount of uncertainty around it.

Great. Okay. And then last one. Just was curious for any color on kind of below the line items within the guide for this year. Just anything you would call out there. I think Sartorius announced their dividend for the year. Just any color on that would be helpful.

Yeah, they did cut the dividend. We baked that into our guidance. And it's understandable given the... the kind of cash constraints that they have.

Okay. Thank you.

Thank you. Your next question is from Dan Leonard from UBS. Please ask your question.

Thank you very much. I had another question about phasing for 2024. You mentioned that the year will be more back-end loaded. Could you elaborate on that? How much more back-end loaded than typical?

Yeah, it's a really good question. You know, normally it's something like, you know, kind of more like 49, 51 when we think of a normal year. And I think we're going to see a much wider spread than that. I think it's anybody's guess exactly what it's going to be, but I think we'll see kind of a bigger delta between the first half and the second half.

Much wider than the two-point spread typically?

Yes. Yes. I think more closer towards four or five-point spread between first and second half then.

Appreciate that. And can you share what are your growth assumptions for process chromatography, droplet digital PCR, and comment on whether a couple of these new product launches you talked about, the Continuum and the DD-Seq, whether they'll be launched in time to contribute to the year?

Yes, Simon, again, I think for process chromatography, as I mentioned previously, we've got these competing forces of accounts that are de-stocked and accounts that are still de-stocking. And I think the net of that is going to be negative because the accounts that are de-stocking are our larger accounts. I think there's still some ongoing uncertainty around that as we keep saying, but the best read of the tea leaves that we've got right now is as mentioned. For digital PCR, You know, we had a challenging Q4 for reasons that have been mentioned and that in the end made it a challenging year as well. As we look to 2024, I think we're certainly seeing nice growth potential in digital PCR. Again, that's predicated to some degree on recovery of the biopharma markets where we've been hit. We've got a very strong existing position there. And also, we've got some good new product launches coming out. So the way I think about it, it's biopharma, market recovery, and it's new product introductions. They're both when, not if, events. And so for the full year, I think we're looking at growth in digital PCR.

That's helpful. Thank you.

Thank you. Your next question is from from RBC Capital Markets. Please ask your question.

Hey, guys. Thanks for taking the questions. Just on DDPCR, can you talk about the growth in the quarter or the negative growth on equipment versus consumables? Obviously, you had a tough comp on equipment placements last year, but was there any consumable growth and how should we think about kind of the consumable as a percentage of total DDPCR from here and where does it go?

Yeah, I think the short answer there is, again, primarily driven by biopharma headwinds. We saw challenges in both instruments and consumables, I'd say with approximately equal weighting. I think we've got a healthy mix now overall in terms of consumables and instruments. And again, as the markets recover, we think we're going to be the beneficiaries of that.

Okay, great. And then on capital deployment, obviously you've still got some room on buybacks. Is buyback still the priority, or is there anything on M&A that you've seen opportunities open up, or should we just think primarily about buybacks for 2024?

Yeah, we certainly, as we mentioned, we've got still several hundred million dollars authorized by the board. and we'll continue to be optimistic for share repurchases, but we still have a focus to continue to look for good complementary business opportunities to tuck-ins, things that are complementary to the business, Probably no change in our thinking around acquisitions, so it's kind of a two-pronged approach. Could be buybacks. Could be some tuck-in acquisitions.

All right. Thanks for that, guys.

It's a combination of both.

Thank you. There are no further questions at this time. I will now hand the call back to Edward Chung for the closing remarks.

Thank you for joining today's call. We will be at the City Unplugged Life Science Access Day in New York at the end of February and hope to see some of you there. As always, we appreciate your interest and we look forward to connecting soon. Bye-bye.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.