PerkinElmer,
Inc. (NYSE: PKI), a global leader committed to innovating for a
healthier world, today reported financial results for the second quarter
ended July 1, 2018.
The Company reported GAAP earnings per share from continuing operations
of $0.58, as compared to GAAP earnings per share from continuing
operations of $0.57 in the second quarter of 2017. GAAP revenue for the
quarter was $703.4 million, as compared to $547.0 million in the second
quarter of 2017. GAAP operating income from continuing operations for
the quarter was $88.1 million, as compared to $74.2 million in the
second quarter of 2017. GAAP operating profit margin was 12.5% as a
percentage of revenue.
Adjusted earnings per share from continuing operations for the quarter
was $0.91, as compared to $0.67 in the second quarter of 2017. Adjusted
revenue for the quarter was $703.6 million, as compared to $547.1
million in the second quarter of 2017. Adjusted operating income from
continuing operations for the quarter was $138.3 million, as compared to
$97.8 million for the same period a year ago. Adjusted operating profit
margin was 19.7% as a percentage of adjusted revenue.
Adjustments for the Company’s non-GAAP financial measures have been
noted in the attached reconciliations.
“We saw continued momentum in the business as both segments experienced
double-digit organic revenue growth in the second quarter,” said Robert
Friel, chairman and chief executive officer of PerkinElmer. “Our focus
on bringing innovative new product offerings to market, while targeting
attractive end markets where our capabilities are well differentiated,
continues to drive solid revenue and adjusted earnings growth. As a
result, we are once again raising our full year organic revenue outlook
and adjusted earnings per share guidance.”
Financial Overview by Reporting Segment for the Second Quarter of 2018
Discovery & Analytical Solutions
Diagnostics
Raises Financial Guidance – Full Year 2018
For the full year 2018, the Company previously forecast GAAP earnings
per share from continuing operations of $2.25 and, on a non-GAAP basis,
adjusted earnings per share of $3.60. The Company now forecasts GAAP
earnings per share from continuing operations of $2.39, and on a
non-GAAP basis, which is expected to include the adjustments noted in
the attached reconciliation, adjusted earnings per share of $3.65.
Conference Call Information
The Company will discuss its second quarter results and its outlook for
business trends in a conference call on August 1, 2018 at 5:00 p.m.
Eastern Time. To access the call, please dial (541) 797-2422 prior to
the scheduled conference call time and provide the access code 6379206.
A live audio webcast of the call will be available on the Investor
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 such as
EUROIMMUN 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; (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 $2.3
billion in 2017, has about 11,000 employees serving customers in more
than 150 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
Six Months Ended
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
Three Months Ended
Six Months Ended
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN
ACCORDANCE WITH GAAP
July 1, 2018
December 31, 2017
Three Months Ended
Six Months Ended
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
December 30, 2018
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
PKI
July 1, 2018
Core Organic revenue growth:
Core Organic revenue growth
DAS
July 1, 2018
July 1, 2018
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 “core organic revenue” to refer to GAAP revenue
excluding Euroimmun, 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 “core 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, 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, 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, other purchase accounting adjustments, acquisition
and divestiture-related expenses, 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.
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:
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, other costs related to business acquisitions
and divestitures, 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.
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