PKI
$87.49
Perkinelmer
$.19
.22%
Earnings Details
3rd Quarter September 2019
Wednesday, October 30, 2019 4:15:00 PM
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Summary

Perkinelmer Beats

Perkinelmer (PKI) reported 3rd Quarter September 2019 earnings of $1.06 per share on revenue of $706.9 million. The consensus earnings estimate was $1.01 per share on revenue of $722.8 million. The Earnings Whisper number was $1.02 per share. Revenue grew 4.8% on a year-over-year basis.

The company said it expects 2019 earnings of approximately $4.07 per share. The company's previous guidance was earnings of $4.02 to $4.07 per share and the current consensus earnings estimate is $4.04 per share for the year ending December 31, 2019.

PerkinElmer Inc is a provider of technology, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets.

Results
Reported Earnings
$1.06
Earnings Whisper
$1.02
Consensus Estimate
$1.01
Reported Revenue
$706.9 Mil
Revenue Estimate
$722.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

PerkinElmer Announces Financial Results for the Third Quarter of 2019

  • Revenue of $706.9 million; 5% Reported growth; Organic growth of 5%
  • GAAP EPS from continuing operations of $0.53; Adjusted EPS of $1.06
  • GAAP operating income margin from continuing operations of 11.1%; Adjusted operating income margin from continuing operations of 21.6%
  • Acquisition of Meizheng Group, a food safety testing provider; bolsters assay capabilities in China
  • Adjusting GAAP EPS guidance to $2.21; Raising adjusted EPS guidance to $4.07

WALTHAM, Mass.--(BUSINESS WIRE)--PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the third quarter ended September 29, 2019.

The Company reported GAAP earnings per share from continuing operations of $0.53, as compared to GAAP earnings per share from continuing operations of $0.68 in the third quarter of 2018. GAAP revenue for the quarter was $706.9 million, as compared to $674.3 million in the third quarter of 2018. GAAP operating income from continuing operations for the quarter was $78.7 million, as compared to $80.2 million for the same period a year ago. GAAP operating profit margin was 11.1% as a percentage of revenue, as compared to 11.9% in the third quarter of 2018.

Adjusted earnings per share from continuing operations for the quarter was $1.06, as compared to $0.90 in the third quarter of 2018. Adjusted revenue for the quarter was $707.1 million, as compared to $674.5 million in the third quarter of 2018. Adjusted operating income from continuing operations for the quarter was $152.5 million, as compared to $128.6 million for the same period a year ago. Adjusted operating profit margin was 21.6% as a percentage of adjusted revenues, as compared to 19.1% in the third quarter of 2018.

Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations.

“Delivering mid-single organic revenue growth and high teens EPS growth in this environment reinforces our belief in the strength and resiliency of our businesses and our team’s operational execution,” said Robert Friel, chairman and chief executive officer of PerkinElmer. “The strong operating leverage we experienced this quarter gave us the confidence to raise our full-year EPS guidance despite additional headwinds from foreign exchange.”

Financial Overview by Reporting Segment for the Third Quarter of 2019

Discovery & Analytical Solutions

  • Revenue was $426.9 million, as compared to $406.2 million for the third quarter of 2018. Reported revenue increased 5% and organic revenue increased 4%.
  • Operating income from continuing operations was $52.3 million, as compared to $48.4 million for the comparable prior period.
  • Adjusted operating income was $86.2 million, as compared to $68.0 million in the third quarter of 2018.

Diagnostics

  • Revenue was $280.0 million, as compared to $268.1 million for the third quarter of 2018. Reported revenue increased 4% and organic revenue increased 6%.
  • Operating income from continuing operations was $47.4 million, as compared to $47.4 million for the comparable prior period.
  • Adjusted operating income was $79.7 million, as compared to $76.2 million in the third quarter of 2018.

Full Year 2019 Guidance

For the full year 2019, the Company now forecasts GAAP earnings per share from continuing operations of $2.21 and, on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $4.07.

Acquisition

We are excited to announce the recent acquisition of Meizheng Group, a leading food safety testing company in China. The addition of Meizheng expands PerkinElmer’s food safety capabilities into attractive markets, including pathogen, toxin, and drug residue testing.

Founded in 2009, and headquartered in Beijing, China, Meizheng offers a comprehensive product portfolio covering immunoassay, microbiology, and molecular testing across prioritized end-markets, including grain and milling, dairy, and meat and seafood. The food safety market in China is growing rapidly due to stricter quality standards and regulations developed in response to increased consumer demand for a safer food supply. Meizheng’s dedicated channel, culture of innovation, loyal customer base, and local regulatory experience create a strong foundation and natural synergies for PerkinElmer’s existing food quality and food safety testing business in China. Combined, PerkinElmer and Meizheng will have a broad set of capabilities across the food value chain, covering both quality and food safety testing at the crop through downstream third-party lab and food processor testing.

Conference Call Information

The Company will discuss its third quarter 2019 results and its outlook for business trends in a conference call on October 30, 2019 at 5:00 p.m. Eastern Time. To access the call, please dial (720) 405-2250 prior to the scheduled conference call time and provide the access code 7094106.

A live audio webcast of the call will be available on the Investors section of the Company’s Web site, www.perkinelmer.com. Please go to the site at least 15 minutes prior to the call in order to register, download, and install any necessary software. An archived version of the webcast will be posted on the Company’s Web site for a two week period beginning approximately two hours after the call.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures. The reasons that we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below following our GAAP financial statements.

Factors Affecting Future Performance

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities, acquisitions and divestitures. Words such as "believes," "intends," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) fluctuations in the global economic and political environments; (3) our failure to introduce new products in a timely manner; (4) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (5) our failure to adequately protect our intellectual property; (6) the loss of any of our licenses or licensed rights; (7) our ability to compete effectively; (8) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (9) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (10) disruptions in the supply of raw materials and supplies; (11) the manufacture and sale of products exposing us to product liability claims; (12) our failure to maintain compliance with applicable government regulations; (13) regulatory changes; (14) our failure to comply with healthcare industry regulations; (15) economic, political and other risks associated with foreign operations; (16) our ability to retain key personnel; (17) significant disruption in our information technology systems, or cybercrime; (18) our ability to obtain future financing; (19) restrictions in our credit agreements; (20) the United Kingdom’s intention to withdraw from the European Union; (21) our ability to realize the full value of our intangible assets; (22) significant fluctuations in our stock price; (23) reduction or elimination of dividends on our common stock; and (24) other factors which we describe under the caption "Risk Factors" in our most recent quarterly report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.

About PerkinElmer

PerkinElmer, Inc. is a global leader focused on innovating for a healthier world. The Company reported revenue of approximately $2.8 billion in 2018, has about 13,000 employees serving customers in more than 180 countries, and is a component of the S&P 500 Index. Additional information is available through 1-877-PKI-NYSE, or at www.perkinelmer.com.

PerkinElmer, Inc. and Subsidiaries

CONDENSED CONSOLIDATED INCOME STATEMENTS

 
 

Three Months Ended

 

Nine Months Ended

(In thousands, except per share data)

September 29,
2019

 

September 30,
2018

 

September 29,
2019

 

September 30,
2018

 

 

Revenue

$

706,923

 

$

674,313

 

$

2,078,177

 

$

2,021,647

 

 

Cost of revenue

 

364,648

 

 

341,986

 

 

1,080,303

 

 

1,056,958

 

Selling, general and administrative expenses

 

204,171

 

 

196,769

 

 

604,581

 

 

601,374

 

Research and development expenses

 

45,376

 

 

48,848

 

 

141,700

 

 

142,028

 

Restructuring and contract termination charges, net

 

14,068

 

 

6,508

 

 

27,868

 

 

13,086

 

 

Operating income from continuing operations

 

78,660

 

 

80,202

 

 

223,725

 

 

208,201

 

 

Interest income

 

(292

)

 

(316

)

 

(925

)

 

(754

)

Interest expense

 

16,149

 

 

16,684

 

 

49,206

 

 

50,745

 

(Gain) loss on disposition of businesses and assets, net

 

-

 

 

(13,031

)

 

2,469

 

 

(13,031

)

Debt extinguishment costs

 

471

 

 

-

 

 

471

 

 

-

 

Other (income) expense, net

 

(922

)

 

(1,176

)

 

658

 

 

(7,013

)

 

Income from continuing operations, before income taxes

 

63,254

 

 

78,041

 

 

171,846

 

 

178,254

 

 

Provision for income taxes

 

4,644

 

 

2,596

 

 

8,642

 

 

12,101

 

 

Income from continuing operations

 

58,610

 

 

75,445

 

 

163,204

 

 

166,153

 

 

Loss on disposition of discontinued operations, before income taxes

 

-

 

 

(308

)

 

-

 

 

(859

)

Provision for (benefit from) income taxes on discontinued operations and dispositions

 

52

 

 

(1,411

)

 

147

 

 

(1,341

)

 

(Loss) gain from discontinued operations and dispositions

 

(52

)

 

1,103

 

 

(147

)

 

482

 

 

Net income

$

58,558

 

$

76,548

 

$

163,057

 

$

166,635

 

 

 

Diluted earnings per share:

Income from continuing operations

$

0.53

 

$

0.68

 

$

1.46

 

$

1.49

 

 

(Loss) gain from discontinued operations and dispositions

 

(0.00

)

 

0.01

 

 

(0.00

)

 

0.00

 

 

Net income

$

0.52

 

$

0.69

 

$

1.46

 

$

1.49

 

 

 

Weighted average diluted shares of common stock outstanding

 

111,559

 

 

111,747

 

 

111,460

 

 

111,510

 

 

 

ABOVE PREPARED IN ACCORDANCE WITH GAAP

 

 

Additional Supplemental Information (1):

(per share, continuing operations)

 

GAAP EPS from continuing operations

 

0.53

 

 

0.68

 

 

1.46

 

 

1.49

 

Amortization of intangible assets

 

0.37

 

 

0.32

 

 

1.09

 

 

0.90

 

Debt extinguishment costs

 

0.00

 

 

-

 

 

0.00

 

 

-

 

Purchase accounting adjustments

 

0.08

 

 

0.04

 

 

0.16

 

 

0.27

 

Acquisition and divestiture-related costs

 

0.01

 

 

0.02

 

 

0.05

 

 

0.05

 

Acceleration of executive compensation

 

0.07

 

 

-

 

 

0.07

 

 

-

 

Significant litigation matter

 

0.01

 

 

0.01

 

 

0.01

 

 

0.05

 

Disposition of businesses and assets, net

 

-

 

 

(0.12

)

 

0.02

 

 

(0.12

)

Restructuring and contract termination charges, net

 

0.13

 

 

0.06

 

 

0.25

 

 

0.12

 

Tax on above items

 

(0.16

)

 

(0.03

)

 

(0.40

)

 

(0.27

)

Impact of tax act

 

0.02

 

 

(0.06

)

 

0.02

 

 

(0.05

)

Adjusted EPS

 

1.06

 

 

0.90

 

 

2.75

 

 

2.43

 

 

(1) amounts may not sum due to rounding

 
 
PerkinElmer, Inc. and Subsidiaries

REVENUE AND OPERATING INCOME (LOSS)

 
 
 

Three Months Ended

 

 

Nine Months Ended

(In thousands, except percentages)

September 29,
2019

 

 

September 30,
2018

 

 

September 29,
2019

 

 

September 30,
2018

 
 
DASReported revenue

$

 

426,904

 

$

 

406,166

 

$

 

1,249,704

 

$

 

1,233,319

 

 
Reported operating income from continued operations

52,347

 

48,381

 

146,963

 

149,243

 

OP%

12.3

%

11.9

%

11.8

%

12.1

%

Amortization of intangible assets

13,723

 

11,384

 

37,105

 

34,567

 

Purchase accounting adjustments

7,429

 

71

 

12,480

 

101

 

Acquisition and divestiture-related costs

444

 

1,688

 

1,403

 

1,759

 

Significant litigation matter

805

 

633

 

1,620

 

5,050

 

Restructuring and contract termination charges, net

11,427

 

5,890

 

22,427

 

11,566

 

Adjusted operating income

86,175

 

68,047

 

221,998

 

202,286

 

Adjusted OP%

20.2

%

16.8

%

17.8

%

16.4

%

 
DiagnosticsReported revenue

280,019

 

268,147

 

828,473

 

788,328

 

Purchase accounting adjustments

192

 

187

 

576

 

562

 

Adjusted Revenue

280,211

 

268,334

 

829,049

 

788,890

 

 
Reported operating income from continued operations

47,443

 

47,411

 

128,184

 

104,585

 

OP%

16.9

%

17.7

%

15.5

%

13.3

%

Amortization of intangible assets

27,547

 

23,878

 

84,094

 

66,112

 

Purchase accounting adjustments

1,694

 

3,886

 

5,781

 

29,517

 

Acquisition and divestiture-related costs

393

 

25

 

1,878

 

4,176

 

Significant litigation matter

-

 

365

 

-

 

193

 

Restructuring and contract termination charges, net

2,641

 

618

 

5,441

 

1,520

 

Adjusted operating income

79,718

 

76,183

 

225,378

 

206,103

 

Adjusted OP%

28.4

%

28.4

%

27.2

%

26.1

%

 
CorporateReported operating loss

(21,130

)

(15,590

)

(51,422

)

(45,627

)

Acceleration of executive compensation

7,721

 

-

 

7,721

 

-

 

Adjusted operating loss

(13,409

)

(15,590

)

(43,701

)

(45,627

)

 
Continuing OperationsReported revenue

$

 

706,923

 

$

 

674,313

 

$

 

2,078,177

 

$

 

2,021,647

 

Purchase accounting adjustments

192

 

187

 

576

 

562

 

Adjusted Revenue

707,115

 

674,500

 

2,078,753

 

2,022,209

 

 
Reported operating income from continued operations

78,660

 

80,202

 

223,725

 

208,201

 

OP%

11.1

%

11.9

%

10.8

%

10.3

%

Amortization of intangible assets

41,270

 

35,262

 

121,199

 

100,679

 

Purchase accounting adjustments

9,123

 

3,957

 

18,261

 

29,618

 

Acquisition and divestiture-related costs

837

 

1,713

 

3,281

 

5,935

 

Acceleration of executive compensation

7,721

 

-

 

7,721

 

-

 

Significant litigation matter

805

 

998

 

1,620

 

5,243

 

Restructuring and contract termination charges, net

14,068

 

6,508

 

27,868

 

13,086

 

Adjusted operating income

$

 

152,484

 

$

 

128,640

 

$

 

403,675

 

$

 

362,762

 

Adjusted OP%

21.6

%

19.1

%

19.4

%

17.9

%

 

REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

 
 
(In thousands)

September 29, 2019

December 30, 2018

 
Current assets:
Cash and cash equivalents

$

392,969

 

$

163,111

 

Accounts receivable, net

 

646,286

 

 

632,669

 

Inventories, net

 

391,820

 

 

338,347

 

Other current assets

 

117,330

 

 

100,507

 

Total current assets

 

1,548,405

 

 

1,234,634

 

 
Property, plant and equipment:
At cost

 

668,835

 

 

680,183

 

Accumulated depreciation

 

(370,595

)

 

(361,593

)

Property, plant and equipment, net

 

298,240

 

 

318,590

 

 
Operating lease right-of-use assets

 

174,689

 

 

-

 

Intangible assets, net

 

1,199,461

 

 

1,199,667

 

Goodwill

 

2,987,541

 

 

2,952,608

 

Other assets, net

 

280,745

 

 

270,023

 

Total assets

$

6,489,081

 

$

5,975,522

 

 
Current liabilities:
Current portion of long-term debt

$

506,650

 

$

14,856

 

Accounts payable

 

190,261

 

 

220,949

 

Short-term accrued restructuring and contract termination charges

 

16,923

 

 

4,834

 

Accrued expenses and other current liabilities

 

472,156

 

 

528,827

 

Current liabilities of discontinued operations

 

2,112

 

 

2,165

 

Total current liabilities

 

1,188,102

 

 

771,631

 

 
Long-term debt

 

1,750,925

 

 

1,876,624

 

Long-term liabilities

 

690,041

 

 

742,312

 

Operating lease liabilities

 

153,216

 

 

-

 

Total liabilities

 

3,782,284

 

 

3,390,567

 

 
Total stockholders' equity

 

2,706,797

 

 

2,584,955

 

Total liabilities and stockholders' equity

$

6,489,081

 

$

5,975,522

 

 
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
 

Three Months Ended

 

Nine Months Ended

September 29,
2019

 

September 30,
2018

 

September 29,
2019

 

September 30,
2018

(In thousands)

 

(In thousands)

 
Operating activities:
Net income

$

58,558

 

$

76,548

 

$

163,057

 

$

166,635

 

Loss (gain) from discontinued operations and dispositions, net of income taxes

 

52

 

 

(1,103

)

 

147

 

 

(482

)

Income from continuing operations

 

58,610

 

 

75,445

 

 

163,204

 

 

166,153

 

Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Stock-based compensation

 

12,304

 

 

11,127

 

 

25,105

 

 

23,275

 

Restructuring and contract termination charges, net

 

14,068

 

 

6,508

 

 

27,868

 

 

13,086

 

Depreciation and amortization

 

53,324

 

 

45,161

 

 

157,117

 

 

133,386

 

Change in fair value of contingent consideration

 

1,238

 

 

3,739

 

 

4,399

 

 

10,804

 

Amortization of deferred debt financing costs and accretion of discounts

 

988

 

 

935

 

 

2,778

 

 

2,454

 

Loss (gain) on disposition of businesses and assets, net

 

-

 

 

(13,031

)

 

2,469

 

 

(13,031

)

Gain on sale of investments, net

 

-

 

 

(557

)

 

-

 

 

(557

)

Debt extinguishment costs

 

471

 

 

-

 

 

471

 

 

-

 

Amortization of acquired inventory revaluation

 

7,693

 

 

-

 

 

13,258

 

 

18,160

 

Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net

 

(12,528

)

 

6,098

 

 

(22,132

)

 

(12,670

)

Inventories

 

2,082

 

 

1,680

 

 

(48,367

)

 

(41,313

)

Accounts payable

 

5,908

 

 

(12,203

)

 

(34,043

)

 

(36,587

)

Accrued expenses and other

 

(37,443

)

 

(31,510

)

 

(143,869

)

 

(111,341

)

Net cash provided by operating activities of continuing operations

 

106,715

 

 

93,392

 

 

148,258

 

 

151,819

 

Net cash used in operating activities of discontinued operations

 

-

 

 

(200

)

 

-

 

 

(200

)

Net cash provided by operating activities

 

106,715

 

 

93,192

 

 

148,258

 

 

151,619

 

 
Investing activities:
Capital expenditures

 

(16,621

)

 

(20,835

)

 

(53,082

)

 

(60,443

)

Purchases of investments

 

(4,519

)

 

-

 

 

(5,387

)

 

(5,500

)

Purchases of licenses

 

-

 

 

-

 

 

(5,000

)

 

-

 

Proceeds from surrender of life insurance policies

 

-

 

 

-

 

 

-

 

 

72

 

Proceeds from disposition of businesses and assets

 

-

 

 

37,854

 

 

550

 

 

38,027

 

Payment of acquisitions, net of cash and cash equivalents acquired

 

(7,882

)

 

(9,000

)

 

(252,620

)

 

(44,057

)

Net cash (used in) provided by investing activities of continuing operations

 

(29,022

)

 

8,019

 

 

(315,539

)

 

(71,901

)

Net cash provided by investing activities of discontinued operations

 

-

 

 

-

 

 

-

 

 

-

 

Net cash (used in) provided by investing activities

 

(29,022

)

 

8,019

 

 

(315,539

)

 

(71,901

)

 
Financing Activities:
Payments on borrowings

 

(841,489

)

 

(352,000

)

 

(1,419,489

)

 

(1,019,000

)

Proceeds from borrowings

 

184,866

 

 

263,000

 

 

1,034,416

 

 

605,000

 

Proceeds from sale of senior debt

 

847,195

 

 

-

 

 

847,195

 

 

369,340

 

Payments of debt financing costs

 

(7,741

)

 

-

 

 

(7,922

)

 

(2,634

)

Settlement of cash flow hedges

 

72

 

 

2,426

 

 

(1,587

)

 

(30,285

)

Net payments on other credit facilities

 

(1,360

)

 

(12,717

)

 

(11,166

)

 

(22,871

)

Payments for acquisition-related contingent consideration

 

(4,500

)

 

(12,800

)

 

(28,200

)

 

(12,800

)

Proceeds from issuance of common stock under stock plans

 

1,009

 

 

11,136

 

 

17,563

 

 

19,484

 

Purchases of common stock

 

(144

)

 

(325

)

 

(6,201

)

 

(4,974

)

Dividends paid

 

(7,775

)

 

(7,751

)

 

(23,282

)

 

(23,222

)

Net cash provided by (used in) financing activities of continuing operations

 

170,133

 

 

(109,031

)

 

401,327

 

 

(121,962

)

Net cash used in financing activities of discontinued operations

 

-

 

 

-

 

 

-

 

 

-

 

Net cash provided by (used in) financing activities

 

170,133

 

 

(109,031

)

 

401,327

 

 

(121,962

)

 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(5,069

)

 

(3,059

)

 

(4,384

)

 

(7,410

)

 
Net increase (decrease) in cash, cash equivalents, and restricted cash

 

242,757

 

 

(10,879

)

 

229,662

 

 

(49,654

)

Cash, cash equivalents, and restricted cash at beginning of period

 

153,220

 

 

163,596

 

 

166,315

 

 

202,371

 

Cash, cash equivalents, and restricted cash at end of period

$

395,977

 

$

152,717

 

$

395,977

 

$

152,717

 

 
 
Supplemental disclosure of cash flow information:
Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows:
Cash and cash equivalents

$

392,969

 

$

149,513

 

$

392,969

 

$

149,513

 

Restricted cash included in other current assets

 

3,008

 

 

3,204

 

 

3,008

 

 

3,204

 

Total cash, cash equivalents and restricted cash

$

395,977

 

$

152,717

 

$

395,977

 

$

152,717

 

 
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)

 
(In millions, except per share data and percentages)

PKI

Three Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Adjusted revenue:
Revenue

$

706.9

 

$

674.3

 

Purchase accounting adjustments

 

0.2

 

 

0.2

 

Adjusted revenue

$

707.1

 

$

674.5

 

 
Adjusted gross margin:
Gross margin

$

342.3

 

48.4

%

$

332.3

 

49.3

%

Amortization of intangible assets

 

15.2

 

2.1

%

 

11.6

 

1.7

%

Purchase accounting adjustments

 

7.9

 

1.1

%

 

0.2

 

0.0

%

Adjusted gross margin

$

365.3

 

51.7

%

$

344.1

 

51.0

%

 
Adjusted SG&A:
SG&A

$

204.2

 

28.9

%

$

196.8

 

29.2

%

Amortization of intangible assets

 

(26.1

)

-3.7

%

 

(20.0

)

-3.0

%

Purchase accounting adjustments

 

(1.2

)

-0.2

%

 

(3.8

)

-0.6

%

Acquisition and divestiture-related expenses

 

(0.8

)

-0.1

%

 

(1.7

)

-0.3

%

Acceleration of executive compensation

 

(7.7

)

-1.1

%

 

-

 

0.0

%

Significant litigation matter

 

(0.8

)

-0.1

%

 

(1.0

)

-0.1

%

Adjusted SG&A

$

167.5

 

23.7

%

$

170.3

 

25.2

%

 
Adjusted R&D:
R&D

$

45.4

 

6.4

%

$

48.8

 

7.2

%

Amortization of intangible assets

 

-

 

0.0

%

 

(3.7

)

-0.5

%

Adjusted R&D

$

45.4

 

6.4

%

$

45.2

 

6.7

%

 
Adjusted operating income:
Operating income

$

78.7

 

11.1

%

$

80.2

 

11.9

%

Amortization of intangible assets

 

41.3

 

5.8

%

 

35.3

 

5.2

%

Purchase accounting adjustments

 

9.1

 

1.3

%

 

4.0

 

0.6

%

Acquisition and divestiture-related expenses

 

0.8

 

0.1

%

 

1.7

 

0.3

%

Acceleration of executive compensation

 

7.7

 

1.1

%

 

-

 

0.0

%

Significant litigation matter

 

0.8

 

0.1

%

 

1.0

 

0.1

%

Restructuring and contract termination charges, net

 

14.1

 

2.0

%

 

6.5

 

1.0

%

Adjusted operating income

$

152.5

 

21.6

%

$

128.6

 

19.1

%

 

PKI

Three Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Adjusted EPS:
GAAP EPS

$

0.52

 

$

0.69

 

Discontinued operations, net of income taxes

 

(0.00

)

 

0.01

 

GAAP EPS from continuing operations

 

0.53

 

 

0.68

 

Amortization of intangible assets

 

0.37

 

 

0.32

 

Debt extinguishment costs

 

0.00

 

 

-

 

Purchase accounting adjustments

 

0.08

 

 

0.04

 

Acquisition and divestiture-related expenses

 

0.01

 

 

0.02

 

Acceleration of executive compensation

 

0.07

 

 

-

 

Significant litigation matter

 

0.01

 

 

0.01

 

Disposition of businesses and assets, net

 

-

 

 

(0.12

)

Restructuring and contract termination charges, net

 

0.13

 

 

0.06

 

Tax on above items

 

(0.16

)

 

(0.03

)

Impact of tax act

 

0.02

 

 

(0.06

)

Adjusted EPS

$

1.06

 

$

0.90

 

 

DAS

Three Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Revenue

$

426.9

 

$

406.2

 

 
Adjusted operating income:
Operating income

$

52.3

 

12.3

%

$

48.4

 

11.9

%

Amortization of intangible assets

 

13.7

 

3.2

%

 

11.4

 

2.8

%

Purchase accounting adjustments

 

7.4

 

1.7

%

 

0.1

 

0.0

%

Acquisition and divestiture-related expenses

 

0.4

 

0.1

%

 

1.7

 

0.4

%

Significant litigation matter

 

0.8

 

0.2

%

 

0.6

 

0.2

%

Restructuring and contract termination charges, net

 

11.4

 

2.7

%

 

5.9

 

1.5

%

Adjusted operating income

$

86.2

 

20.2

%

$

68.0

 

16.8

%

 

Diagnostics

Three Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Adjusted revenue:
Revenue

$

280.0

 

$

268.1

 

Purchase accounting adjustments

 

0.2

 

 

0.2

 

Adjusted revenue

$

280.2

 

$

268.3

 

 
Adjusted operating income:
Operating income

$

47.4

 

16.9

%

$

47.4

 

17.7

%

Amortization of intangible assets

 

27.5

 

9.8

%

 

23.9

 

8.9

%

Purchase accounting adjustments

 

1.7

 

0.6

%

 

3.9

 

1.4

%

Acquisition and divestiture-related expenses

 

0.4

 

0.1

%

 

0.0

 

0.0

%

Significant litigation matter

 

-

 

0.0

%

 

0.4

 

0.1

%

Restructuring and contract termination charges, net

 

2.6

 

0.9

%

 

0.6

 

0.2

%

Adjusted operating income

$

79.7

 

28.4

%

$

76.2

 

28.4

%

 
 
(1) amounts may not sum due to rounding
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
 
(In millions, except per share data and percentages)

PKI

Nine Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Adjusted revenue:
Revenue

$ 2,078.2

$ 2,021.6

Purchase accounting adjustments

0.6

0.6

Adjusted revenue

$ 2,078.8

$ 2,022.2

 
Adjusted gross margin:
Gross margin

$ 997.9

48.0%

$ 964.7

47.7%

Amortization of intangible assets

45.6

2.2%

34.8

1.7%

Purchase accounting adjustments

13.8

0.7%

18.8

0.9%

Adjusted gross margin

$ 1,057.3

50.9%

$ 1,018.3

50.4%

 
Adjusted SG&A:
SG&A

$ 604.6

29.1%

$ 601.4

29.7%

Amortization of intangible assets

(75.6)

-3.6%

(62.0)

-3.1%

Purchase accounting adjustments

(4.4)

-0.2%

(10.9)

-0.5%

Acquisition and divestiture-related expenses

(3.3)

-0.2%

(5.9)

-0.3%

Acceleration of executive compensation

(7.7)

-0.4%

-

0.0%

Significant litigation matter

(1.6)

-0.1%

(5.2)

-0.3%

Adjusted SG&A

$ 512.0

24.6%

$ 517.3

25.6%

 
Adjusted R&D:
R&D

$ 141.7

6.8%

$ 142.0

7.0%

Amortization of intangible assets

-

0.0%

(3.8)

-0.2%

Adjusted R&D

$ 141.7

6.8%

$ 138.2

6.8%

 
Adjusted operating income:
Operating income

$ 223.7

10.8%

$ 208.2

10.3%

Amortization of intangible assets

121.2

5.8%

100.7

5.0%

Purchase accounting adjustments

18.3

0.9%

29.6

1.5%

Acquisition and divestiture-related expenses

3.3

0.2%

5.9

0.3%

Acceleration of executive compensation

7.7

0.4%

-

0.0%

Significant litigation matter

1.6

0.1%

5.2

0.3%

Restructuring and contract termination charges, net

27.9

1.3%

13.1

0.6%

Adjusted operating income

$ 403.7

19.4%

$ 362.8

17.9%

 

PKI

Nine Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Adjusted EPS:
GAAP EPS

$ 1.46

$ 1.49

Discontinued operations

(0.00)

0.00

GAAP EPS from continuing operations

1.46

1.49

Amortization of intangible assets

1.09

0.90

Debt extinguishment costs

0.00

-

Purchase accounting adjustments

0.16

0.27

Significant litigation matter

0.01

0.05

Acquisition and divestiture-related expenses

0.05

0.05

Acceleration of executive compensation

0.07

-

Loss (Gain) on disposition of businesses and assets, net

0.02

(0.12)

Restructuring and contract termination charges, net

0.25

0.12

Tax on above items

(0.40)

(0.27)

Impact of tax act

0.02

(0.05)

Adjusted EPS

$ 2.75

$ 2.43

 

PKI

 

 

 

 

Twelve Months Ended

 

 

 

 

 

 

December 29, 2019

 

 

Adjusted EPS:

 

 

 

 

Projected

 

 

GAAP EPS from continuing operations

$ 2.21

Amortization of intangible assets

1.46

Debt extinguishment costs

0.29

Purchase accounting adjustments

0.24

Significant litigation matter

0.01

Acquisition and divestiture-related expenses

0.06

Acceleration of executive compensation

0.07

Disposition of businesses and assets, net

0.02

Restructuring and contract termination charges, net

0.25

Tax on above items

(0.56)

Impact of tax act

0.02

Adjusted EPS

$ 4.07

 

DAS

Nine Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Revenue

$ 1,249.7

$ 1,233.3

 
Adjusted operating income:
Operating income

$ 147.0

11.8%

$ 149.2

12.1%

Amortization of intangible assets

37.1

3.0%

34.6

2.8%

Purchase accounting adjustments

12.5

1.0%

0.1

0.0%

Acquisition and divestiture-related expenses

1.4

0.1%

1.8

0.1%

Significant litigation matter

1.6

0.1%

5.1

0.4%

Restructuring and contract termination charges, net

22.4

1.8%

11.6

0.9%

Adjusted operating income

$ 222.0

17.8%

$ 202.3

16.4%

 

Diagnostics

Nine Months Ended

September 29, 2019

 

 

 

September 30, 2018

 

 

 
Adjusted revenue:
Revenue

$ 828.5

$ 788.3

Purchase accounting adjustments

0.6

0.6

Adjusted revenue

$ 829.0

$ 788.9

 
Adjusted operating income:
Operating income

$ 128.2

15.5%

$ 104.6

13.3%

Amortization of intangible assets

84.1

10.2%

66.1

8.4%

Purchase accounting adjustments

5.8

0.7%

29.5

3.7%

Acquisition and divestiture-related expenses

1.9

0.2%

4.2

0.5%

Significant litigation matter

-

0.0%

0.2

0.0%

Restructuring and contract termination charges, net

5.4

0.7%

1.5

0.2%

Adjusted operating income

$ 225.4

27.2%

$ 206.1

26.1%

 
 
(1) amounts may not sum due to rounding
PerkinElmer, Inc. and Subsidiaries

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

 

 

PKI

Three Months Ended

September 29, 2019

Organic revenue growth:

 

Reported revenue growth

5%

Less: effect of foreign exchange rates

-2%

Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses

2%

Organic revenue growth

5%

 

 

DAS

Three Months Ended

September 29, 2019

Organic revenue growth:

 

Reported revenue growth

5%

Less: effect of foreign exchange rates

-2%

Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses

3%

Organic revenue growth

4%

 

 

Diagnostics

Three Months Ended

September 29, 2019

Organic revenue growth:

 

Reported revenue growth

4%

Less: effect of foreign exchange rates

-2%

Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses

0%

Organic revenue growth

6%

 

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash, non-recurring or other items, which result from facts and circumstances that vary in frequency and impact on continuing operations. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management's ability to make useful forecasts. Management believes these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

We use the term “adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We use the related term “adjusted revenue growth” to refer to the measure of comparing current period adjusted revenue with the corresponding period of the prior year.

We use the term “organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year.

We use the term “adjusted gross margin” to refer to GAAP gross margin, excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “adjusted gross margin percentage” to refer to adjusted gross margin as a percentage of adjusted revenue.

We use the term “adjusted SG&A expense” to refer to GAAP SG&A expense, excluding amortization of intangible assets, purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters and significant environmental charges. We use the related term “adjusted SG&A percentage” to refer to adjusted SG&A expense as a percentage of adjusted revenue.

We use the term “adjusted R&D expense” to refer to GAAP R&D expense, excluding amortization of intangible assets. We use the related term “adjusted R&D percentage” to refer to adjusted R&D expense as a percentage of adjusted revenue.

We use the term “adjusted operating income,” to refer to GAAP operating income, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters, significant environmental charges, and restructuring and contract termination charges. We use the related terms “adjusted operating profit percentage,” “adjusted operating profit margin,” or “adjusted operating margin” to refer to adjusted operating income as a percentage of adjusted revenue.

We use the term “adjusted earnings per share,” or “adjusted EPS,” to refer to GAAP earnings per share, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding discontinued operations, amortization of intangible assets, debt extinguishment costs, other purchase accounting adjustments, acquisition and divestiture-related expenses, acceleration of executive compensation, significant litigation matters, significant environmental charges, disposition of businesses and assets, net, and restructuring and contract termination charges. We also exclude adjustments for mark-to-market accounting on post-retirement benefits, therefore only our projected costs have been used to calculate our non-GAAP measure. We also adjust for any tax impact related to the above items, and exclude the impact of significant tax events.

Management includes or excludes the effect of each of the items identified below in the applicable non-GAAP financial measure referenced above for the reasons set forth below with respect to that item:

  • Amortization of intangible assets— purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.
  • Debt extinguishment costs—we incur costs and income related to the extinguishment of debt, including make-whole payments to debt holders, accelerated amortization of debt fees and discounts, and expense or income arising from hedges utilized to lock in make-whole payments. We exclude the impact of these items from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules—accounting rules require us to account for the fair value of revenue from contracts assumed in connection with our acquisitions. As a result, our GAAP results reflect the fair value of those revenues, which is not the same as the revenue that otherwise would have been recorded by the acquired entity. We include such revenue in our non-GAAP measures because we believe the fair value of such revenue does not accurately reflect the performance of our ongoing operations for the period in which such revenue is recorded.
  • Other purchase accounting adjustments—accounting rules require us to adjust various balance sheet accounts, including inventory and deferred rent balances to fair value at the time of the acquisition. As a result, the expenses for these items in our GAAP results are not the same as what would have been recorded by the acquired entity. Accounting rules also require us to estimate the fair value of contingent consideration at the time of the acquisition, and any subsequent changes to the estimate or payment of the contingent consideration and purchase accounting adjustments are charged to expense or income. We exclude the impact of any changes to contingent consideration from our non-GAAP measures because we believe these expenses or benefits do not accurately reflect the performance of our ongoing operations for the period in which such expenses or benefits are recorded.
  • Acquisition and divestiture-related expenses—we incur legal, due diligence, stay bonuses, interest expense, foreign exchange gains and losses, significant acquisition integration expenses and other costs related to acquisitions and divestitures. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Acceleration of executive compensationthe announced retirement of a senior executive resulted in an acceleration of compensation expense. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Restructuring and contract termination charges—restructuring and contract termination expenses consist of employee severance and other exit costs as well as the cost of terminating certain lease agreements or contracts. Management does not believe such costs accurately reflect the performance of our ongoing operations for the period in which such costs are reported.
  • Adjustments for mark-to-market accounting on post-retirement benefits—we exclude adjustments for mark-to-market accounting on post-retirement benefits, and therefore only our projected costs are used to calculate our non-GAAP measures. We exclude these adjustments because they do not represent what we believe our investors consider to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure.
  • Significant litigation matters—we incur expenses related to significant litigation matters. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Significant environmental charges—we incur expenses related to significant environmental charges. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Disposition of businesses and assets, net—we exclude the impact of gains or losses from the disposition of businesses and assets from our adjusted earnings per share. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported.
  • Impact of foreign currency changes on the current period—we exclude the impact of foreign currency from these measures by using the prior period’s foreign currency exchange rates for the current period because foreign currency exchange rates are subject to volatility and can obscure underlying trends.
  • Impact of significant tax events – we exclude the impact of significant tax events, such as the Tax Cuts and Jobs Act of 2017. Management does not believe the impact of significant tax events accurately reflects the performance of our ongoing operations for the periods in which the impact of such events were recorded.

The tax effect for discontinued operations is calculated based on the authoritative guidance in the Financial Accounting Standards Board’s Accounting Standards Codification 740, Income Taxes. The tax effect for amortization of intangible assets, inventory fair value adjustments related to business acquisitions, changes to the fair values assigned to contingent consideration, debt extinguishment costs, other costs related to business acquisitions and divestitures, acceleration of executive compensation, significant litigation matters, significant environmental charges, adjustments for mark-to-market accounting on post-retirement benefits, disposition of businesses and assets, net, restructuring and contract termination charges, and the revenue from contracts acquired with various acquisitions is calculated based on operational results and applicable jurisdictional law, which contemplates tax rates currently in effect to determine our tax provision. The tax effect for the impact from foreign currency exchange rates on the current period is calculated based on the average rate currently in effect to determine our tax provision.

The non-GAAP financial measures described above are not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. There are material limitations associated with non-GAAP financial measures because they exclude charges that have an effect on our reported results and, therefore, should not be relied upon as the sole financial measures by which to evaluate our financial results. Management compensates and believes that investors should compensate for these limitations by viewing the non-GAAP financial measures in conjunction with the GAAP financial measures. In addition, the non-GAAP financial measures included in this earnings announcement may be different from, and therefore may not be comparable to, similar measures used by other companies.

Each of the non-GAAP financial measures listed above is also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and discontinued operations, and determine the bonus payments for senior management and employees.

Investor Relations:
PerkinElmer, Inc.
Bryan Kipp (781) 663-5583
bryan.kipp@perkinelmer.com

Media Contact:
PerkinElmer, Inc.
Brian Willinsky (781) 663-5728
brian.willinsky@perkinelmer.com

Source: PerkinElmer, Inc.