EX-99.1 2 a52018940ex99_1.htm EXHIBIT 99.1
Exhibit 99.1


PerkinElmer Announces Financial Results for the Second Quarter of 2019

  • Revenue of $722.5 million; 3% Reported growth; Organic growth of 5%
  • GAAP EPS from continuing operations of $0.62; Adjusted EPS of $1.00
  • GAAP operating income margin from continuing operations of 12.7%; Adjusted operating income margin from continuing operations of 20.2%. Strong operating margin improvement year-to-date.
  • Updating GAAP EPS guidance range to $2.61 to $2.66; Reiterating adjusted EPS guidance range of $4.02 to $4.07

WALTHAM, Mass.--(BUSINESS WIRE)--July 29, 2019--PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the second quarter ended June 30, 2019.

The Company reported GAAP earnings per share from continuing operations of $0.62, as compared to GAAP earnings per share from continuing operations of $0.58 in the second quarter of 2018. GAAP revenue for the quarter was $722.5 million, as compared to $703.4 million in the second quarter of 2018. GAAP operating income from continuing operations for the quarter was $91.7 million, as compared to $88.1 million in the second quarter of 2018. GAAP operating profit margin was 12.7% as a percentage of revenue, as compared to 12.5% in the second quarter of 2018.

Adjusted earnings per share from continuing operations for the quarter was $1.00, as compared to $0.91 in the second quarter of 2018. Adjusted revenue for the quarter was $722.7 million, as compared to $703.6 million in the second quarter of 2018. Adjusted operating income from continuing operations for the quarter was $146.0 million, as compared to $138.3 million for the same period a year ago. Adjusted operating profit margin was 20.2% as a percentage of adjusted revenues, as compared to 19.7% in the second quarter of 2018.

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

“I am very pleased with our second quarter performance as we continued to make significant progress against our key long-term priorities while also generating mid-single digit organic revenue growth and double-digit adjusted EPS growth,” said Robert Friel, chairman and chief executive officer of PerkinElmer. “The actions we are taking not only position us for a strong finish to 2019 but further evolve the company to deliver higher growth, greater resiliency and increased profitability.”


Financial Overview by Reporting Segment for the Second Quarter of 2019

Discovery & Analytical Solutions

  • Revenue was $434.0 million, as compared to $430.6 million for the second quarter of 2018. Reported revenue increased 1% and organic revenue increased 2%.
  • Operating income from continuing operations was $57.7 million, as compared to $64.7 million for the comparable prior period.
  • Adjusted operating income was $81.5 million, as compared to $76.4 million in the second quarter of 2018.

Diagnostics

  • Revenue was $288.6 million, as compared to $272.7 million for the second quarter of 2018. Reported revenue increased 6% and organic revenue increased 9%.
  • Operating income from continuing operations was $49.3 million, as compared to $38.8 million for the comparable prior period.
  • Adjusted operating income was $79.7 million, as compared to $77.2 million in the second quarter of 2018.

Full Year 2019 Guidance

For the full year 2019, the Company now forecasts GAAP earnings per share from continuing operations in a range of $2.61 to $2.66 and, on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliations, adjusted earnings per share of $4.02 to $4.07.

Conference Call Information

The Company will discuss its second quarter 2019 results and its outlook for business trends in a conference call on July 29, 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 2774907.

A live audio webcast of the call will be available on the Investors section of the Company’s website, 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 website 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


Six Months Ended




(In thousands, except per share data)
June 30, 2019
July 1, 2018
June 30, 2019
July 1, 2018











 











 


Revenue

$

722,517

 


$

703,362

 


$

1,371,254

 


$

1,347,334

 













 


Cost of revenue

 

374,724

 


 

363,222

 


 

715,655

 


 

714,972

 




Selling, general and administrative expenses

 

201,553

 


 

204,880

 


 

400,410

 


 

404,605

 




Research and development expenses

 

48,344

 


 

47,196

 


 

96,324

 


 

93,180

 




Restructuring and contract termination charges, net

 

6,161

 


 

-

 


 

13,800

 


 

6,578

 













 


Operating income from continuing operations

 

91,735

 


 

88,064

 


 

145,065

 


 

127,999

 













 


Interest income

 

(350

)


 

(173

)


 

(633

)


 

(438

)




Interest expense

 

17,207

 


 

16,411

 


 

33,057

 


 

34,061

 




Loss on disposition of businesses and assets, net

 

336

 


 

-

 


 

2,469

 


 

-

 




Other expense (income), net

 

2,715

 


 

118

 


 

1,580

 


 

(5,837

)













 


Income from continuing operations, before income taxes

 

71,827

 


 

71,708

 


 

108,592

 


 

100,213

 













 


Provision for income taxes

 

2,686

 


 

7,035

 


 

3,998

 


 

9,505

 













 


Income from continuing operations

 

69,141

 


 

64,673

 


 

104,594

 


 

90,708

 













 


Loss on disposition of discontinued operations, before income taxes

 

-

 


 

(551

)


 

-

 


 

(551

)




Provision for income taxes on discontinued operations and dispositions

 

54

 


 

59

 


 

95

 


 

70

 













 


Loss from discontinued operations and dispositions

 

(54

)


 

(610

)


 

(95

)


 

(621

)













 


Net income

$

69,087

 


$

64,063

 


$

104,499

 


$

90,087

 













 











 


Diluted earnings per share:










Income from continuing operations

$

0.62

 


$

0.58

 


$

0.94

 


$

0.81

 













 


Loss from discontinued operations and dispositions

 

(0.00

)


 

(0.01

)


 

(0.00

)


 

(0.01

)













 


Net income

$

0.62

 


$

0.57

 


$

0.94

 


$

0.81

 













 











 


Weighted average diluted shares of common stock outstanding

 

111,528

 


 

111,452

 


 

111,411

 


 

111,391

 













 











 


ABOVE PREPARED IN ACCORDANCE WITH GAAP











 











 


Additional Supplemental Information (1):










(per share, continuing operations)



















 


GAAP EPS from continuing operations

 

0.62

 


 

0.58

 


 

0.94

 


 

0.81

 




Amortization of intangible assets

 

0.37

 


 

0.29

 


 

0.72

 


 

0.59

 




Purchase accounting adjustments

 

0.05

 


 

0.14

 


 

0.08

 


 

0.23

 




Significant litigation matter

 

0.00

 


 

(0.00

)


 

0.01

 


 

0.04

 




Acquisition and divestiture-related costs

 

0.03

 


 

0.02

 


 

0.05

 


 

0.03

 




Disposition of businesses and assets, net

 

0.00

 


 

-

 


 

0.02

 


 

-

 




Restructuring and contract termination charges, net

 

0.06

 


 

-

 


 

0.12

 


 

0.06

 




Tax on above items

 

(0.13

)


 

(0.12

)


 

(0.25

)


 

(0.24

)




Impact of tax act

 

-

 


 

-

 


 

-

 


 

0.01

 




Adjusted EPS

 

1.00

 


 

0.91

 


 

1.69

 


 

1.54

 













 


(1) amounts may not sum due to rounding



















 











 

 
PerkinElmer, Inc. and Subsidiaries
REVENUE AND OPERATING INCOME (LOSS)




 








 








 




Three Months Ended


Six Months Ended

(In thousands, except percentages)

June 30, 2019


July 1, 2018


June 30, 2019


July 1, 2018











 










 
DAS
Reported revenue

$

 

433,967

 

$

 

430,628

 

$

 

822,800

 

$

 

827,153

 











 


Reported operating income from continued operations

57,689

 


64,665

 


94,616

 


100,862

 



OP%

13.3

%


15.0

%


11.5

%


12.2

%



Amortization of intangible assets

13,113

 


11,472

 


23,382

 


23,183

 



Purchase accounting adjustments

5,014

 


15

 


5,051

 


30

 



Acquisition and divestiture-related costs

416

 


33

 


959

 


71

 



Significant litigation matter

439

 


232

 


815

 


4,417

 



Restructuring and contract termination charges, net

4,820

 


-

 


11,000

 


5,676

 



Adjusted operating income

81,491

 


76,417

 


135,823

 


134,239

 



Adjusted OP%

18.8

%


17.7

%


16.5

%


16.2

%











 
Diagnostics
Reported revenue

288,550

 


272,734

 


548,454

 


520,181

 



Purchase accounting adjustments

192

 


188

 


384

 


375

 



Adjusted revenue

288,742

 


272,922

 


548,838

 


520,556

 











 


Reported operating income from continued operations

49,255

 


38,780

 


80,741

 


57,174

 



OP%

17.1

%


14.2

%


14.7

%


11.0

%



Amortization of intangible assets

28,089

 


21,045

 


56,547

 


42,234

 



Purchase accounting adjustments

516

 


16,103

 


4,087

 


25,631

 



Acquisition and divestiture-related costs

478

 


1,616

 


1,485

 


4,151

 



Significant litigation matter

-

 


(322

)


-

 


(172

)



Restructuring and contract termination charges, net

1,341

 


-

 


2,800

 


902

 



Adjusted operating income

79,679

 


77,222

 


145,660

 


129,920

 



Adjusted OP%

27.6

%


28.3

%


26.5

%


25.0

%











 
Corporate
Reported operating loss

(15,209

)


(15,381

)


(30,292

)


(30,037

)











 
Continuing Operations Reported revenue

$

 

722,517

 

$

 

703,362

 

$

 

1,371,254

 

$

 

1,347,334

 



Purchase accounting adjustments

192

 


188

 


384

 


375

 



Adjusted revenue

722,709

 


703,550

 


1,371,638

 


1,347,709

 











 


Reported operating income from continued operations

91,735

 


88,064

 


145,065

 


127,999

 



OP%

12.7

%


12.5

%


10.6

%


9.5

%



Amortization of intangible assets

41,202

 


32,517

 


79,929

 


65,417

 



Purchase accounting adjustments

5,530

 


16,118

 


9,138

 


25,661

 



Acquisition and divestiture-related costs

894

 


1,649

 


2,444

 


4,222

 



Significant litigation matter

439

 


(90

)


815

 


4,245

 



Restructuring and contract termination charges, net

6,161

 


-

 


13,800

 


6,578

 



Adjusted operating income

$

 

145,961

 

$

 

138,258

 

$

 

251,191

 

$

 

234,122

 



Adjusted OP%

20.2

%


19.7

%


18.3

%


17.4

%











 










 

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


 
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS

 

 



 
(In thousands) June 30, 2019
December 30, 2018



 
Current assets:


Cash and cash equivalents

$

150,016

 


$

163,111

 

Accounts receivable, net

 

654,454

 


 

632,669

 

Inventories, net

 

414,330

 


 

338,347

 

Other current assets

 

118,961

 


 

100,507

 

Total current assets

 

1,337,761

 


 

1,234,634

 




 
Property, plant and equipment:


At cost

 

670,821

 


 

680,183

 

Accumulated depreciation

 

(368,101

)


 

(361,593

)

Property, plant and equipment, net

 

302,720

 


 

318,590

 




 
Operating lease right-of-use assets

 

187,934

 


 

-

 

Intangible assets, net

 

1,282,440

 


 

1,199,667

 

Goodwill

 

3,042,049

 


 

2,952,608

 

Other assets, net

 

246,168

 


 

270,023

 

Total assets

$

6,399,072

 


$

5,975,522

 




 
Current liabilities:


Current portion of long-term debt

$

38,043

 


$

14,856

 

Accounts payable

 

188,051

 


 

220,949

 

Short-term accrued restructuring and contract termination charges

 

10,987

 


 

4,834

 

Accrued expenses and other current liabilities

 

497,426

 


 

528,827

 

Current liabilities of discontinued operations

 

2,130

 


 

2,165

 

Total current liabilities

 

736,637

 


 

771,631

 




 
Long-term debt

 

2,074,628

 


 

1,876,624

 

Long-term liabilities

 

716,929

 


 

742,312

 

Operating lease liabilities

 

164,011

 


 

-

 

Total liabilities

 

3,692,205

 


 

3,390,567

 




 
Total stockholders' equity

 

2,706,867

 


 

2,584,955

 

Total liabilities and stockholders' equity

$

6,399,072

 


$

5,975,522

 




 



 
PREPARED IN ACCORDANCE WITH GAAP


 
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS





 








 

Three Months Ended


Six Months Ended



June 30, 2019


July 1, 2018


June 30, 2019


July 1, 2018



(In thousands)


(In thousands)










 
Operating activities:







Net income

$

69,087

 


$

64,063

 


$

104,499

 


$

90,087

 


Loss from discontinued operations and dispositions, net of income taxes

 

54

 


 

610

 


 

95

 


 

621

 


Income from continuing operations

 

69,141

 


 

64,673

 


 

104,594

 


 

90,708

 


Adjustments to reconcile income from continuing operations







to net cash provided by continuing operations:







Stock-based compensation

 

6,703

 


 

6,816

 


 

12,801

 


 

12,148

 


Restructuring and contract termination charges, net

 

6,161

 


 

-

 


 

13,800

 


 

6,578

 


Depreciation and amortization

 

53,324

 


 

43,772

 


 

103,793

 


 

88,225

 


Change in fair value of contingent consideration

 

59

 


 

6,948

 


 

3,161

 


 

7,065

 


Amortization of deferred debt financing costs and accretion of discounts

 

929

 


 

904

 


 

1,790

 


 

1,519

 


Loss on disposition of businesses and assets, net

 

336

 


 

-

 


 

2,469

 


 

-

 


Amortization of acquired inventory revaluation

 

5,282

 


 

8,952

 


 

5,565

 


 

18,160

 


Changes in assets and liabilities which provided (used) cash, excluding







effects from companies acquired:







Accounts receivable, net

 

(17,468

)


 

(8,488

)


 

(9,604

)


 

(18,768

)


Inventories

 

(12,009

)


 

(17,965

)


 

(50,450

)


 

(42,993

)


Accounts payable

 

(38,500

)


 

(14,358

)


 

(39,951

)


 

(24,384

)


Accrued expenses and other

 

(27,100

)


 

(18,268

)


 

(106,425

)


 

(79,831

)


Net cash provided by operating activities of continuing operations

 

46,858

 


 

72,986

 


 

41,543

 


 

58,427

 


Net cash used in operating activities of discontinued operations

 

-

 


 

-

 


 

-

 


 

-

 


Net cash provided by operating activities

 

46,858

 


 

72,986

 


 

41,543

 


 

58,427

 










 
Investing activities:







Capital expenditures

 

(16,586

)


 

(16,956

)


 

(36,461

)


 

(39,608

)


Purchases of investments

 

(348

)


 

-

 


 

(868

)


 

-

 


Purchases of licenses

 

-

 


 

-

 


 

(5,000

)


 

-

 


Proceeds from surrender of life insurance policies

 

-

 


 

-

 


 

-

 


 

72

 


Proceeds from disposition of businesses and assets

 

-

 


 

173

 


 

550

 


 

173

 


Payment of acquisitions, net of cash and cash equivalents acquired

 

(240,354

)


 

(39,470

)


 

(244,738

)


 

(40,557

)


Net cash used in investing activities of continuing operations

 

(257,288

)


 

(56,253

)


 

(286,517

)


 

(79,920

)


Net cash provided by investing activities of discontinued operations

 

-

 


 

-

 


 

-

 


 

-

 


Net cash used in investing activities

 

(257,288

)


 

(56,253

)


 

(286,517

)


 

(79,920

)










 
Financing Activities:







Payments on borrowings

 

(426,000

)


 

(520,000

)


 

(578,000

)


 

(667,000

)


Proceeds from borrowings

 

670,550

 


 

138,000

 


 

849,550

 


 

342,000

 


Proceeds from sale of senior debt

 

-

 


 

369,340

 


 

-

 


 

369,340

 


Payments of debt issuance costs

 

(93

)


 

(2,634

)


 

(181

)


 

(2,634

)


Settlement of cash flow hedges

 

16

 


 

3,458

 


 

(1,659

)


 

(32,711

)


Net payments on other credit facilities

 

(6,330

)


 

(7,147

)


 

(9,806

)


 

(10,154

)


Payments for acquisition-related contingent consideration

 

(11,600

)


 

-

 


 

(23,700

)


 

-

 


Proceeds from issuance of common stock under stock plans

 

7,944

 


 

881

 


 

16,554

 


 

8,348

 


Purchases of common stock

 

(764

)


 

(95

)


 

(6,057

)


 

(4,649

)


Dividends paid

 

(7,764

)


 

(7,744

)


 

(15,507

)


 

(15,471

)


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

 

225,959

 


 

(25,941

)


 

231,194

 


 

(12,931

)


Net cash used in financing activities of discontinued operations

 

-

 


 

-

 


 

-

 


 

-

 


Net cash provided by (used in) financing activities

 

225,959

 


 

(25,941

)


 

231,194

 


 

(12,931

)










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

 

235

 


 

(8,201

)


 

685

 


 

(4,351

)










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

 

15,764

 


 

(17,409

)


 

(13,095

)


 

(38,775

)


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

 

137,456

 


 

181,005

 


 

166,315

 


 

202,371

 


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

$

153,220

 


$

163,596

 


$

153,220

 


$

163,596

 










 








 
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

 

150,016

 


$

163,392

 


 

150,016

 


$

163,392

 


Restricted cash included in other current assets

 

3,204

 


 

204

 


 

3,204

 


 

204

 


Total cash, cash equivalents and restricted cash

$

153,220

 


$

163,596

 


$

153,220

 


$

163,596

 










 
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




June 30, 2019


July 1, 2018









 
Adjusted revenue:





Revenue

$

 

722.5

 


$

 

703.4

 



Purchase accounting adjustments

 

0.2

 


 

0.2

 



Adjusted revenue

$

 

722.7

 


$

 

703.6

 









 
Adjusted gross margin:





Gross margin

$

 

347.8

 

48.1

%

$

 

340.1

 

48.4

%


Amortization of intangible assets

 

15.6

 

2.2

%

 

11.6

 

1.6

%


Purchase accounting adjustments

 

5.5

 

0.8

%

 

9.2

 

1.3

%


Adjusted gross margin

$

 

368.9

 

51.0

%

$

 

360.9

 

51.3

%






 
Adjusted SG&A:





SG&A

$

 

201.6

 

27.9

%

$

 

204.9

 

29.1

%


Amortization of intangible assets

 

(25.6

)

-3.5

%

 

(20.9

)

-3.0

%


Purchase accounting adjustments

 

(0.1

)

0.0

%

 

(7.0

)

-1.0

%


Acquisition and divestiture-related expenses

 

(0.9

)

-0.1

%

 

(1.6

)

-0.2

%


Significant litigation matter

 

(0.4

)

-0.1

%

 

0.1

 

0.0

%


Adjusted SG&A

$

 

174.6

 

24.2

%

$

 

175.5

 

24.9

%








 
Adjusted R&D:





R&D

$

 

48.3

 

6.7

%

$

 

47.2

 

6.7

%


Amortization of intangible assets

-

 

0.0

%

 

(0.1

)

0.0

%


Adjusted R&D

$

 

48.3

 

6.7

%

$

 

47.1

 

6.7

%








 
Adjusted operating income:





Operating income

$

 

91.7

 

12.7

%

$

 

88.1

 

12.5

%


Amortization of intangible assets

 

41.2

 

5.7

%

 

32.5

 

4.6

%


Purchase accounting adjustments

 

5.5

 

0.8

%

 

16.1

 

2.3

%


Acquisition and divestiture-related expenses

 

0.9

 

0.1

%

 

1.6

 

0.2

%


Significant litigation matter

 

0.4

 

0.1

%

 

(0.1

)

0.0

%


Restructuring and contract termination charges, net

 

6.2

 

0.9

%

 

-

 

0.0

%


Adjusted operating income

$

 

146.0

 

20.2

%

$

 

138.3

 

19.7

%








 


PKI


Three Months Ended




June 30, 2019


July 1, 2018









 
Adjusted EPS:





GAAP EPS

$

 

0.62

 


$

 

0.57

 



Discontinued operations, net of income taxes

 

(0.00

)


 

(0.01

)



GAAP EPS from continuing operations

 

0.62

 


 

0.58

 



Amortization of intangible assets

 

0.37

 


 

0.29

 



Purchase accounting adjustments

 

0.05

 


 

0.14

 



Significant litigation matter

 

0.00

 


 

(0.00

)



Acquisition and divestiture-related expenses

 

0.03

 


 

0.02

 



Gain on disposition of businesses and assets, net

 

0.00

 


 

-

 



Restructuring and contract termination charges, net

 

0.06

 


 

-

 



Tax on above items

 

(0.13

)


 

(0.12

)



Adjusted EPS

$

 

1.00

 


$

 

0.91

 









 


DAS




Three Months Ended




June 30, 2019


July 1, 2018









 
Revenue

$

 

434.0

 


$

 

430.6

 









 
Adjusted operating income:





Operating income

$

 

57.7

 

13.3

%

$

 

64.7

 

15.0

%


Amortization of intangible assets

 

13.1

 

3.0

%

 

11.5

 

2.7

%


Purchase accounting adjustments

 

5.0

 

1.2

%

 

0.0

 

0.0

%


Acquisition and divestiture-related expenses

 

0.4

 

0.1

%

 

0.0

 

0.0

%


Significant litigation matter

 

0.4

 

0.1

%

 

0.2

 

0.1

%


Restructuring and contract termination charges, net

 

4.8

 

1.1

%

 

-

 

0.0

%


Adjusted operating income

$

 

81.5

 

18.8

%

$

 

76.4

 

17.7

%








 


Diagnostics




Three Months Ended




June 30, 2019


July 1, 2018









 
Adjusted revenue:





Revenue

$

 

288.6

 


$

 

272.7

 



Purchase accounting adjustments

 

0.2

 


 

0.2

 



Adjusted revenue

$

 

288.7

 


$

 

272.9

 









 
Adjusted operating income:





Operating income

$

 

49.3

 

17.1

%

$

 

38.8

 

14.2

%


Amortization of intangible assets

 

28.1

 

9.7

%

 

21.0

 

7.7

%


Purchase accounting adjustments

 

0.5

 

0.2

%

 

16.1

 

5.9

%


Acquisition and divestiture-related expenses

 

0.5

 

0.2

%

 

1.6

 

0.6

%


Significant litigation matter

 

-

 

0.0

%

 

(0.3

)

-0.1

%


Restructuring and contract termination charges, net

 

1.3

 

0.5

%

 

-

 

0.0

%


Adjusted operating income

$

 

79.7

 

27.6

%

$

 

77.2

 

28.3

%








 






 
(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


Six Months Ended




June 30, 2019


July 1, 2018









 
Adjusted revenue:





Revenue

$

1,371.3

 


$

1,347.3

 



Purchase accounting adjustments

 

0.4

 


 

0.4

 



Adjusted revenue

$

1,371.6

 


$

1,347.7

 









 
Adjusted gross margin:





Gross margin

$

655.6

 

47.8

%

$

632.4

 

46.9

%


Amortization of intangible assets

 

30.4

 

2.2

%

 

23.3

 

1.7

%


Purchase accounting adjustments

 

6.0

 

0.4

%

 

18.6

 

1.4

%


Adjusted gross margin

$

692.0

 

50.5

%

$

674.2

 

50.0

%






 
Adjusted SG&A:





SG&A

$

400.4

 

29.2

%

$

404.6

 

30.0

%


Amortization of intangible assets

 

(49.5

)

-3.6

%

 

(42.0

)

-3.1

%


Purchase accounting adjustments

 

(3.2

)

-0.2

%

 

(7.1

)

-0.5

%


Acquisition and divestiture-related expenses

 

(2.4

)

-0.2

%

 

(4.2

)

-0.3

%


Significant litigation matter

 

(0.8

)

-0.1

%

 

(4.2

)

-0.3

%


Adjusted SG&A

$

344.5

 

25.1

%

$

347.0

 

25.8

%








 
Adjusted R&D:





R&D

$

96.3

 

7.0

%

$

93.2

 

6.9

%


Amortization of intangible assets

 

-

 

0.0

%

 

(0.2

)

0.0

%


Adjusted R&D

$

96.3

 

7.0

%

$

93.0

 

6.9

%








 
Adjusted operating income:





Operating income

$

145.1

 

10.6

%

$

128.0

 

9.5

%


Amortization of intangible assets

 

79.9

 

5.8

%

 

65.4

 

4.9

%


Purchase accounting adjustments

 

9.1

 

0.7

%

 

25.7

 

1.9

%


Acquisition and divestiture-related expenses

 

2.4

 

0.2

%

 

4.2

 

0.3

%


Significant litigation matter

 

0.8

 

0.1

%

 

4.2

 

0.3

%


Restructuring and contract termination charges, net

 

13.8

 

1.0

%

 

6.6

 

0.5

%


Adjusted operating income

$

251.2

 

18.3

%

$

234.1

 

17.4

%








 


PKI


Six Months Ended




June 30, 2019


July 1, 2018









 
Adjusted EPS:





GAAP EPS

$

0.94

 


$

0.81

 



Discontinued operations

 

(0.00

)


 

(0.01

)



GAAP EPS from continuing operations

 

0.94

 


 

0.81

 



Amortization of intangible assets

 

0.72

 


 

0.59

 



Purchase accounting adjustments

 

0.08

 


 

0.23

 



Significant litigation matter

 

0.01

 


 

0.04

 



Acquisition and divestiture-related expenses

 

0.05

 


 

0.03

 



Gain on disposition of businesses and assets, net

 

0.02

 


 

-

 



Restructuring and contract termination charges, net

 

0.12

 


 

0.06

 



Tax on above items

 

(0.25

)


 

(0.24

)



Impact of tax act

 

-

 


 

0.01

 



Adjusted EPS

$

1.69

 


$

1.54

 









 


PKI




Twelve Months Ended







December 29, 2019



Adjusted EPS:


Projected



GAAP EPS from continuing operations


$2.61 - $2.66

Amortization of intangible assets


 

1.47

 



Purchase accounting adjustments


 

0.23

 



Significant litigation matter


 

0.01

 



Acquisition and divestiture-related expenses


 

0.05

 



Disposition of businesses and assets, net


 

0.02

 



Restructuring and contract termination charges, net


 

0.12

 



Tax on above items


 

(0.49

)



Adjusted EPS


$4.02 - $4.07







 


DAS


Six Months Ended





June 30, 2019

July 1, 2018









 
Revenue

$

822.8

 


$

827.2

 









 
Adjusted operating income:





Operating income

$

94.6

 

11.5

%

$

100.9

 

12.2

%


Amortization of intangible assets

 

23.4

 

2.8

%

 

23.2

 

2.8

%


Purchase accounting adjustments

 

5.1

 

0.6

%

 

0.0

 

0.0

%


Acquisition and divestiture-related expenses

 

1.0

 

0.1

%

 

0.1

 

0.0

%


Significant litigation matter

 

0.8

 

0.1

%

 

4.4

 

0.5

%


Restructuring and contract termination charges, net

 

11.0

 

1.3

%

 

5.7

 

0.7

%


Adjusted operating income

$

135.8

 

16.5

%

$

134.2

 

16.2

%








 


Diagnostics


Six Months Ended





June 30, 2019


July 1, 2018









 
Adjusted revenue:





Revenue

$

548.5

 


$

520.2

 



Purchase accounting adjustments

 

0.4

 


 

0.4

 



Adjusted revenue

$

548.8

 


$

520.6

 









 
Adjusted operating income:





Operating income

$

80.7

 

14.7

%

$

57.2

 

11.0

%


Amortization of intangible assets

 

56.5

 

10.3

%

 

42.2

 

8.1

%


Purchase accounting adjustments

 

4.1

 

0.7

%

 

25.6

 

4.9

%


Acquisition and divestiture-related expenses

 

1.5

 

0.3

%

 

4.2

 

0.8

%


Significant litigation matter

 

-

 

0.0

%

 

(0.2

)

0.0

%


Restructuring and contract termination charges, net

 

2.8

 

0.5

%

 

0.9

 

0.2

%


Adjusted operating income

$

145.7

 

26.5

%

$

129.9

 

25.0

%








 






 
(1) amounts may not sum due to rounding











 

 
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)





 





 


PKI



Three Months Ended




June 30, 2019

Organic revenue growth:




Reported revenue growth

3%



Less: effect of foreign exchange rates

-3%



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

1%



Organic revenue growth

5%








 





 


DAS



Three Months Ended




June 30, 2019

Organic revenue growth:

 



Reported revenue growth

1%



Less: effect of foreign exchange rates

-3%



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

1%



Organic revenue growth

2%








 





 


Diagnostics



Three Months Ended




June 30, 2019

Organic revenue growth:




Reported revenue growth

6%



Less: effect of foreign exchange rates

-3%



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

0%



Organic revenue growth

9%








 
(1) amounts may not sum due to rounding









 





 

 


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, 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, 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.
  • 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.
  • 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, 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.

Contacts

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

Media Contact:
PerkinElmer, Inc.
Fara Goldberg (781) 663-5699
fara.goldberg@perkinelmer.com