Bio-Rad Laboratories, Inc. (BIO) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Quarter 4 and Full Year 2012 Bio-Rad Laboratories, Inc. Earnings Conference Call. My name is Ian, I'll be your operator for today. [Operator Instructions] And as a reminder, the call is being recorded for replay purposes. I'd like to turn the call over to Mr. Ron Hutton. He's the Treasurer. Please proceed, Sir.

Thank you, Ian. Before we begin the call, I would like to caution everyone that we will be making forward-looking statements about management's goals, plans and expectations. Because our actual results may differ materially from these plans and expectations, 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. With that, I'd like to turn the call over to Christine Tsingos, Executive Vice President and Chief Financial Officer.

Thanks, Ron. Good afternoon, everyone, and thank you for joining us. Today, we will review the fourth quarter and full year financial results for 2012, as well as provide some insight into our thinking for 2013. Let's start with a review of the quarterly results. We are pleased to report that net sales for the fourth quarter of fiscal 2012 were a record $573.8 million, an increase of 4.3% versus the year-ago period sales of $550.2 million. On a currency-neutral basis, quarterly sales grew an impressive 6.1%. During the quarter, we experienced good currency-neutral sales growth in our diabetes monitoring, quality controls and BioPlex 2200 product line, as well as many of our Life Science product lines, most notably, process chromatography, amplification consumables and sales of our QX100 Digital PCR system. The overall quarterly growth was tempered somewhat by continued sluggishness in Europe. The consolidated gross margin for the quarter was in line with expectations at 55.9% and compares to last year's gross margin of 56.5%. The decline in margin versus last year is primarily reflective of product mix, increased amortization cost and continued pricing pressure. During the quarter, we recorded a total of approximately $6.9 million in cost of goods sold for the noncash, purchase accounting expense related to prior acquisitions, which compares to $6.2 million in the year-ago period. SG&A expense for the fourth quarter was $189.1 million or 32.9% of sales compared to $175 million or 31.8% of sales last year. The increase in spend versus last year is partially related to our ERP project, but also reflective of the onetime reversal of our incentive bonus accruals of approximately $9 million that occurred in the fourth quarter of last year. Amortization of intangibles related to our acquisitions recorded in SG&A in the fourth quarter was approximately $2.4 million. Research and development expense in Q4 was 10.4% of sales or $59.8 million. This increase in spending, both sequentially and year-over-year, is reflective of our investments in Digital PCR and cell biology products, as well as focus on the development of new products for diagnostic markets such as diabetes monitoring and blood typing. Interest and other for the quarter was a net expense of approximately $6.2 million compared to $12 million last year. This lower expense amount versus last year is related to a onetime gain of approximately $4.3 million for the sale of a building and land, as well as increased investment income. The effective tax rate used in the fourth quarter was 28% and in line with our guidance. Remember that last year's lower rate of 20% was primarily related to the finalization of foreign audit, as well as decreases in tax reserves due to statute lapses. Reported net income for the fourth quarter was $47.5 million or $1.65 per share on a fully diluted basis compared to $59.2 million last year or $2.08 per share. Excluding the onetime gain for the sale of real property, we estimate that fully diluted earnings per share would have been $1.57. Our Life Science group reported record sales for the fourth quarter of $204.2 million, a growth of 2.7% versus last year, which was also a very strong quarter for the group. On a currency-neutral basis, sales increased 3.7% for the quarter. These quarterly results reflect strong sales of amplification reagents, process media and continued growth of our new Digital PCR system. On a geographic basis, sales in Latin America and the U.S. were especially robust. Strength in the topline combined with good expense management helped to push segment profit for the Life Science group significantly higher when compared to the first 3 individual quarters of 2012. Our Clinical Diagnostics group also achieved record sales for the quarter of $365.9 million compared to $347.3 million last year, an increase of 5.3% on a reported basis or an impressive 7.5% currency neutral. These sales were led by continued strong performance in the quality controls and diabetes product lines, as well as solid growth for Microbiology and BioPlex 2200 revenue. On a geographic view, diagnostic currency-neutral sales for the quarter increased most notably in Asia Pacific and North America, but were somewhat offset by a continued decline in Europe. Reported fourth quarter segment profit for diagnostic also remains strong at more than $51 million. Looking at the full year results, we are pleased to report annual revenues of $2,069,000,000, about flat with last year on a reported basis. On a currency-neutral basis, sales for the year grew 3.6%, which represents the currency headwind of more than $79 million. The organic currency-neutral growth for the full year was 3.1%. With a challenging global funding environment, our Life Science group posted annual sales of $688.4 million, a decrease of about 1% versus 2011 and a growth of 1.5% currency neutral. This sales growth was primarily fueled by our Digital PCR product line, which finished the year slightly lower than our original guidance. We also saw good annual growth in our process media, amplification consumables and electrophoresis product lines, as well as good growth in the Latin America and Asia Pacific regions. During the year, we introduced several new platforms and consumables, which bode well for future growth. Moreover, the recent launches of the new S3 Cell Sorter and our next-generation chromatography system, coupled with the addition of the Serotec antibody business, should help to broaden our reach into the tools market around the world during 2013. For the year, Clinical Diagnostic sales were $1,365,000,000, slightly higher than 2011 on a reported basis and an increase of 4.7% on a currency-neutral basis. This growth was fueled by continued momentum in quality controls and diabetes monitoring products. On a geographical view, Asia Pacific and the other emerging markets such as Latin America and Eastern Europe showed good growth for the year. This growth was partially offset by a decline in Europe, our largest market. Total company gross margins for the full year were 56.1%, in line with our original guidance set at the beginning of the year and compares to 56.8% in 2011. The decrease in margin versus last year is primarily related to the addition of $10 million of acquisition-related amortization expense in our Life Science segment. Total amortization of intangibles and purchase accounting reported in cost of goods sold in 2012 was $26.8 million. SG&A expense as a percent of sales was 33% for the year and better than we estimated at the beginning of 2012. The 2 primary drivers of this better-than-expected margins resulted from the accounting reversal recorded during the year for the $16 million reduction in the QuantaLife earnout valuation as sales were lower than expected, as well as the bad debt allowance reduction of more than $6 million, following unexpected payment from the government of Spain. Excluding these 2 noncash items, the SG&A margins for the year was approximately 34%. SG&A expense for acquisition-related amortization was $11.7 million for the full year. Research and development expense in 2012 was substantially higher at $214 million or 10.3% of sales. This increase is a direct reflection of our investment in Digital PCR and cell biology, as well as new product development in the Diagnostics segment. Looking to 2013, R&D expenses as a percentage of sales will likely stay at that 10% level as we move a number of investments through the product development pipeline. Net income for the full year was $169.2 million versus last year's net income of $178.2 million, a decrease of about 5%. As we guided at the beginning of the year, the decline in net profit primarily relates to our investment in new IT systems and the addition of QuantaLife. The effective tax rate for the full year was 27%. For 2013, we expect the effective tax rate, excluding any discrete items that may occur, will be in the 27% to 29% range. This estimated rate includes the impact of the retroactive reinstatement of the 2012 federal R&D credit, which is estimated to benefit our effective rate by approximately 1% for the full-2013 year, and around 5% in the first quarter. For 2012, Bio-Rad's balance sheet also remains strong. As of December 31, total cash and short-term investments were $921 million compared to $813 million at the end of last year. Net cash generated from operations during the fourth quarter was $98.7 million and $278.9 million for the full year 2012. The year-over-year increase in cash flow is the result of higher collections and investment income, as well as lower interest payment. EBITDA grew to record levels for 2012, finishing the year at more than $411 million. Net capital expenditures were $34 million for the quarter and $146.1 million for the full year, slightly above the $130 million to $140 million range estimated at the beginning of 2012, and driven by better-than-expected instrument places -- placement in our diagnostic market. The decrease in fourth quarter net CapEx is primarily related to our onetime gain on the sale of real property. Looking to 2013, we estimate that CapEx spending will continue in the $140 million to $150 million range, primarily reflecting our continuing investment in new IT systems and technology. And finally, depreciation and amortization for the quarter was $35.5 million and $130 million for the full year. We are pleased with our 2012 operating results, especially in light of some challenging economic headwinds for both tools and diagnostics in many parts of the world, and we anticipate that this challenging economic environment will likely continue into 2013, especially in Europe, as well as potentially in the U.S. with the ongoing uncertainty surrounding sequestration. However, a strong product lineup should help to offset some of these challenges. We have begun shipping our new benchtop cell sorter and will soon launch a next-generation chromatography system used for protein purification in the academic and biopharma markets. On the diagnostic side of the business, we are looking forward to new products and opportunities in the blood typing, diabetes monitoring and quality controls market. Given this combination of both headwinds and drivers, we are estimating currency-neutral sales growth to be in the 3% to 3.5% range for 2013. With regard to margins, we are hoping to hold the full year gross margin basically flat around 56% despite adding $5 million to $10 million of estimated medical device tax and incremental amortization associated with the new cell biology technology. Looking to the operating margin outlook, we view 2013 as another year of investment, and thus, are estimating an increase in spend during the year, including an incremental $15 million to $20 million related to our ERP project. The net result of these internal investments and the Medical Device Act will likely produce an operating margin in the 11% to 11.5% range for the full year. Keep in mind that our 2012 operating margin, excluding the $22 million of accounting reversals I spoke of earlier, was 11.7%. Also, as I mentioned earlier, we anticipate a full year effective tax rate of 27% to 29%, and CapEx spend of $140 million to $150 million for 2013. And finally, we would emphasize that this outlook for 2013 does not include our recent acquisition of AbD Serotec. We are currently in the process of analyzing the operations and purchase price valuations. Our best estimate at this time is that the antibody business will add about $20 million to $25 million of incremental sales to the topline in 2013, and be a headwind to operating income in the $7 million to $10 million range, including amortization expense. We will be able to give you a finalized 2013 outlook, including the Serotec business, on our first quarter earnings call. And now, I'll turn the call over to Norman for a few comments.

Okay. So I guess, I would say that while the fourth quarter sales were encouraging, as Christine says, we do expect the economic malaise to continue in 2013. In the U.S., it looks like we may bump up against the sequestration and [indiscernible] continues to be in the doldrums. As a counterbalance to that, we have the growing economies in Asia, Latin America, Eastern Europe, again, as a counterbalance. Christine also mentioned some of the new platforms we have, especially in Life Science, which expand our reach into some key markets, and in some cases, open up new avenues for us. So while some of these investments we're making in new technologies and systems are having a dampening effect on the bottom line, we obviously feel that they're valuable for the future. And certainly, we appreciate your patience that we make these investments to either enter new markets, and on the systems side, give us the tools to help us get greater operating leverage as we grow for the future. So that's about it. With that, I think we'll open it up to questions. Ian?

[Operator Instructions] And we have a question for you straight away. It's from the line of Dan Leonard at Leerink Swann.

Just a couple of questions about the topline guide, and then one on ERP. So on the topline guidance, is it fair to say that your 3% to 3.5% currency-neutral expectation includes the impact of the sequester in the U.S?

That's a good question, Dan. I think that if there's some sort of full sequestration, then, no, it does not include that, and that would be downside to that guidance. I mean, yes, I think as Brad has been saying all along, he is seeing behavior in the market of people anticipating some sort of slowdown and kind of holding tight to their grant dollars. So from that respect, we're a little cautious. But if there is a full-on sequestration, then, no, I -- that's probably not anticipated in our 3% to 3.5% outlook.

Okay. And then on the diagnostics side, how are you thinking about potential for new screening recommendations in the U.S.? And can you remind -- HIV screening recommendations. And can you remind us how big your HIV testing business is?

Okay. So maybe John will comment a little bit on the changes in the screening environment. But as you know, we don't disclose our sales to the level of detail on a product level or even a division basis.

We have another question for you. This one's from Paul Knight of CLSA.

This is actually Brian Kipp [ph] on behalf of Paul. A question for you. You guys allude to this 3% to 3.5% organic growth in 2013. And touching on that similar economic environment as you saw on 2012, are you going to see -- do you think you do expect an acceleration in sales like you did or kind of a similar trend as you did in 2012? Or do you think it's going to -- basically, are you worried about coming out of the gate in first quarter and accelerating through fourth quarter?

I think -- so, good question. When we build our forecast, we try to and do it on a currency-neutral basis and look at what the rates were last year. And setting aside the comments that we just made on sequestration, which could affect the Q1 rate, I think that if currency doesn't change much from where it's been and where it was in the average year, then I think the growth will be fairly ratable with the exception of Q4 of 2013, I'm not sure. We've just boasted a pretty strong quarter and it'd end up being a tough compare for us when we're all sitting here a year from now, so we'll see.

And I guess just one follow-up. Do you guys -- you alluded to some strength in the U.S. and some strengths in Asia and some softness in Europe. Do you -- can you provide any more color on that numbers? Any segments that did a little bit stronger or weaker than others?

It's John Goetz from the diagnostic side of the business. Yes, we had a good strong quarter particularly in a couple of product lines, diabetes being kind of the primary one. We had some exceptional shipments in the fourth quarter, particularly into the Asia Pacific market. And we also finished the year nicely up in the United States. So a combination of those 2 things puts us in a pretty good position.

And this is Brad Crutchfield. As far as the Life Science business, in the U.S., certainly it'd be the Digital PCR and process chromatography. Process chromatography were particularly strong. It helped kind of offset the slowness of the sort of traditional repurchase throughout the academic sector. And again, we continue to see some strength -- continued strength in Asia Pacific.

Okay. Can you guys -- is there any way you could give like if it was the low-single digit growth in the regions or a mid-single, or is that as steep as you guys can go?

Historically, we really haven't got into the level of detail as talking about growth rate by region or product line.

We have another question for you. This one's from John Wood at Jefferies. Jon Davis Wood - Jefferies & Company, Inc., Research Division: I guess following up on the last one. So for John, it sounds like it was pretty broad-based on your business. I understand the diabetes color, but was there any tender-related business or was it just actual execution, more of an execution dynamic than an actual -- a lumpiness dynamic in the fourth quarter? I guess the same question for Brad on the process business. I know that business moves around a lot, and so I'd be curious to hear if you kind of called out, hey, that was 1%, 2% nonrecurring benefit or it's not possible to do that from an order perspective.

On the diagnostic side, we are fulfilling tenders all the time. So there's no special fourth quarter phenomenon associated with exceptional tender fulfillment. Having said that, driving that sales in the fourth quarter was pretty broad across almost every product line that we have. So there was a lot of good execution around the world, I'd have to say.

John, this is Brad. Concerning the process business, you are correct. It was particularly strong in the fourth quarter, but overall, a pretty strong year. As you know, a lot of this relates to clinical trials, [indiscernible] stage III in FDA approvals. So overall, I would say that we raised the base for this business in 2012 as a result of the number of processes we're in. But again, this business will be -- continue to be lumpy quarter-to-quarter. But the growth that we saw was a general strengthening of the bases. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Okay, good color. Brad, so can you -- I don't think -- I think Christine kind of alluded to it, but can you give the QuantaLife number in the fourth quarter and anything you're willing to offer? I know that was a particularly strong number, kind of how do you see that shaking out in 2013?

So John, now that we've kind of rounded our one-year anniversary on QuantaLife being part of our results in the fourth quarter, we consider it organic to our business, so it's not a specific number that we're going to be disclosing. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Okay. So you -- there was no -- I think you gave a number down 1.2% organically for the Life Science business. Is that right for the year?

Yes, I think...

Yes, I don't know. I'll look it up. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Okay. All right, good. Christine, can you talk about just how much that business kind of dragged your OP at least in '12? And you don't have to give a '13 number, I just -- I'd like to hear ultimately, did that business come in within that initial $20 million burn rate?

Yes. I think -- in fact, I think we were talking about as much as $25 million between the amortization and the operating results, and that's about where it came in. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Sure. Anything Brad can offer on Propel? Can you call that -- I would assume that's in your 3% to 3.5% number. You're all willing to qualify what that contributes in 2013?

So certainly, we won't be able to quantify specifically but other than to say that the product is launched and we are taking orders and making deliveries on the product. So far, the customer seems to be -- seems to have hit a really nice fix in sort of cell market -- cell sorting market. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Very good. Last one. So Christine, you talked about the ERP spending being up $15 million to $20 million. That's a P&L number, correct, in 2013?

It is a P&L number. And what's behind that number, John, are several things. Some, obviously, we need to start depreciating. We plan to go live with the first deployment early in the first half of 2013, and that will have to start taking on some depreciation associated with that. There's also a fair amount of related support and other expense associated with the go live that we'll be taking on. And then maybe a small increment in the project itself, but a lot of it have to do with going live with our first deployment. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Okay. Did you call out the amount of capital in that $140 million to $150 million related to the capitalization?

We did not. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Can you?

Are you talking about how much of it relates to the ERP? Jon Davis Wood - Jefferies & Company, Inc., Research Division: Yes, ma'am.

It's $35 million to $40 million.

Gentlemen, we have another question for you. This one's from Jeffrey Matthews at RAM Partners.

First, you called out Latin America, and I don't ever recall you calling that out before. How significant is that as a market for you down the road, do you think?

We have actually called it out before and it's becoming a more significant market for us as it grows. They seem to be getting -- Latin America seems to be more stable today than it was many years ago and we've been investing in that market, so it is becoming a more significant market for us.

Yes. So...

Still, relative to the rest of the world, it's small, but it's measurable.

Yes, I think that's right. It's still single digit in terms of percent of overall sales, but certainly one of our fastest-growing markets.

Okay. And then Norman talked about new platforms in Life Science that opened up new avenues for you. Could you talk a little bit about what those avenues are and how important they might get to down the road?

Well, actually, Brad might be able to talk about this a little better. But I think especially in this area of cell biology, if you look at the past, we've concentrated on the researchers studying genes and proteins, and this is kind of a third segment, people studying cells. And so the idea of this kind of platform and intro into the cell biology market or the cell assay market is really a new avenue for us. Brad, anything to add?

Yes. I think if we look at the platforms, you can look at cell biology as a front end of our workflow, it's really the way customers are looking at single cell biology or sorting their cells before they begin their research. Certainly, the QX100 and then followed on into our protein characterization platform, sort of traditional electro-blot platform, are all going to benefit by having content, and this is biologically relevant content. And last year, we introduced the complete human genome, we have the mouse genome coming through this year. And then the acquisition of AbD Serotec gives us the antibody content to go on to cell sorter, as well as to go on our Western Blot platform. So really, for us, it's kind of a vertical integration strategy, not just the platform and some of the reagents, but the biologically relevant content. It's kind of our strategy going forward.

Okay. And is there something about what's going on now that makes this the time to have done it rather than years past or not?

Well, I think, part of it is, is that a lot of the data around next-gen sequencing has opened up a lot of information that ultimately has to be validated by protein expression. And the only way to do protein expression, of course, is, in some cases, you're looking at very rare events that you have to do single cell biology. But that certainly sets us well up with the cell sorter. And then on the other side is traditional tools for looking at very slight nuances in protein expression ultimately to validate what is genomic information.

I see. Okay, great. And then finally, on the ERP implementation, what inning are you in on the implementation? And what surprises, if any, are you experiencing? And has there been any change in the timetable for when it begins to switch from being a cost item strictly to being a benefit to working capital and margin?

Okay. Well, I think we're still somewhat early in the game here, early innings in terms of the overall project. Remember when we started down this journey, we talked about it being a 4- to 5-year project for us, wanting to take a fair amount of time upfront to work on a good global design that we could truly replicate around the world and try and get to a single platform, a single system. And then also talked about that we want to be pretty deliberate in how we roll this out and none of us really having the stomach for a big bang approach. And so moving into our first deployment, which is a small part of the U.S., as a proof of concept, if you will, and try and take it from there. So that's where we are now. A lot of the design is behind us, and we're getting close to going live with that first deployment. In terms of what we know now that maybe we didn't know before, I mean, we kind of knew this was going to be hard and it truly is hard. And at the same time, we expect that there are a fair amount of benefits, and I think we're going to find that there are. We -- as we move forward through this, we need to start making some decisions about what is the most effective way to get to the finish line and vis-à-vis, how we move geographically around the world in terms of further implementation, either on a geographic business or a line of business aspect, and we're looking at that now. Clearly, for us to take that system abroad is a very complex path that will take a fair amount of planning. So that actually may push the timeline out a little bit for the international location. But at the same time, I think there's plenty that we can continue to achieve here at the U.S.

We have another question for you. This one's from the line of Matthew Gertzinger [ph] at [indiscernible].

Just a broader question. We've been around as shareholders for a little bit of time, and there always seems like there's an interesting slate of business opportunities, whether it's the BioPlex or the IH 1000 or otherwise, and really earnings just haven't advanced for a couple of years here. And so I guess my question is, what's the level of management's commitment to really drive earnings back to the $6 to $7 range?

Well, I think there are -- if we're pretty committed to doing that, I mean, we're not making these investments just for fun. We want the return on those investments and we have taken our margins down in order to do these things, again, because we feel that they'll give us the right kind of leverage for the future. And so I think we are pretty well committed. We're -- that's kind of our internal goal, is to get back to the mid- to high-teens in terms of operating margin.

Yes. And I would agree with that. I think sometimes it's hard for us as it sounds like maybe for you from time to time as we look at this and the short-term impact on our P&L especially when we made such progress in growing our margins from the single digits up to that high of 14%. But in the end, we keep coming back to if we don't make this investments, we're not going to have the strong foundation that we need to be scalable moving forward, but more importantly, the technology that will help us take some of the redundancy out of our business that we have on a global basis. So each time we look at what this is, we become very committed to continuing down this path so that we can build that foundation, and therefore, fulfill our commitment to actually expand our earnings power in the future.

Yes, I think that's helpful and intuitive. I think the timeline, the commitment to a timeline seems to be kind of slipping and there always seems to be something technologically interesting like a Serotec or otherwise that comes along for whatever reasons. Sounds like it's operating in a meaningful loss position from the get-go, and it just seems like that just sets us back here another year or 2. I guess, I'm just struggling with the patience factor and the timeline here.

Fair enough.

We have another question here. This one is from the line of Jeffrey Warshauer at Sidoti & Company. Jeffrey Warshauer - Sidoti & Company, LLC: So did I hear you accurately before? Did you mention beyond the 3% to 3.5% sales growth, you threw out the number of $20 million to $25 million of incremental sales from acquisitions?

That's correct. Jeffrey Warshauer - Sidoti & Company, LLC: And how much of that do you think you could see in the first quarter due to the closing of the recent acquisition in the first quarter?

That's a good question. Probably, if I -- if the hits are any judge as we've done, other -- bring in other acquisitions into the fold, my guess would be at this point, that it would be more backend loaded because history shows in the first few months of bringing something in, there's always a big focus on integration and in getting to know the business, and we tend to see growth in the latter quarter. So I'm not sure that the increment in Q1 has been substantial. But again, we're just trying to get our arms around that business having recently closed it. Jeffrey Warshauer - Sidoti & Company, LLC: Okay. And relative to going live in the ERP and your expectations in the U.S., maybe you could give a better timeline, if you could, on how you think you'll proceed throughout this year and when you think you could go live in Europe.

So right now, we're hoping that sometime in the second quarter, that's first deployment in the U.S. And again, it's one of our smaller divisions based in the U.S. So it's not -- I wouldn't characterize it as all the U.S. Hoping to go live in the second quarter, and then the remainder of this year, the balance of this year will be spent planning and finalizing design and actually developing our second deployment. I think as far as timing for Europe, given the complexity of Europe and the number of legal entities and manufacturing sites, distribution sites, et cetera, that we have, we're probably still, oh my gosh, 18 to 24 months away from really getting into Europe and starting to bring those various entities into the fold. Jeffrey Warshauer - Sidoti & Company, LLC: You think that's from going live in Europe, 18 to 24 months?

Well, I think -- I'm not sure from what direction you're asking your question. If your question is when do we start going live with all of these multiple operations that we have, it's not one big bang in Europe either. So could we start to go live in the 24-month window with smaller operations? Sure. But if your question is, when do you really have Europe into the fold, and therefore, when do you start to see the benefits, because we've spoken in the past how Europe holds the key to the largest benefits of this project, if that's where your question is coming from, then it's at least 24 months away, and most likely longer than that before we have all of Europe in the fold and producing a benefit. Jeffrey Warshauer - Sidoti & Company, LLC: Okay, that's helpful. And lastly, regarding your path of investment in Sartorius, is there any way to potentially generate additional value from that investment through collaboration or unlocking value through monetization?

There are always those options, yes. Jeffrey Warshauer - Sidoti & Company, LLC: Can you provide any insight into what you might be looking at?

No.

One final question for you. This one is from the line of Jon Wood at Jefferies again. Jon Davis Wood - Jefferies & Company, Inc., Research Division: So you've had some extremely high coupon debt coming that you can kind of call in September. Can we assume that you guys do that? So I think it's the 15th of September. Should we assume you can call that and maybe put it out into some longer-term, more favorably financed paper?

Yes. So good question, John. I think we're looking forward to September as much as you are so that we can refinance or take out. We'll make that decision as we get closer to it, that 8% debt. And I should say that that's not factored into the discussion that we had today on our outlook. Jon Davis Wood - Jefferies & Company, Inc., Research Division: Okay, great. And Christine, just we haven't talked about this, I don't think, publicly. But you guys have obviously a lot of cash on the balance sheet. I would assume a fair amount of that is overseas. Can you just talk about, hey, how much you can access on your balance sheet without having to go through some tax consequences? Just so we understand about what's immediately deployable and what is perhaps earmarked for more of an M&A or longer-term tax planning situation.

Okay, sure. So as I mentioned in the prepared remarks, it's about $921 million on the balance sheet. The vast majority is actually here in the U.S., Jon. I think maybe up to $200 million is sitting outside the United States of the $921 million. And of course, we have operations all over the U.S., and a lot of those require continued investments. And we've been making some acquisitions outside the United States, for example, the most recent, the AbD Serotec one, where we can use some of that cash. But in terms of tax planning, we do consider it a permanent reinvestment and are continuing to do it to invest and expand internationally, not just via acquisitions, but through organic investment in manufacturing, et cetera. But the majority of the cash does sit here and gives us the flexibility to invest internally and externally in acquisitions and things like that. So that -- does that answer your question or are you heading somewhere else with this? Jon Davis Wood - Jefferies & Company, Inc., Research Division: No, that was great.

We've no further questions in the queue.

Okay, great. Well, thank you, everyone, for taking the time to join us today, and hopefully, we'll be seeing you soon. Bye bye.

Thank you. Ladies and gentlemen, that concludes your conference call, and you may now disconnect. Thank you very much for joining us today. Do enjoy the rest of your day.