Company Announcements

PerkinElmer Announces Financial Results for the Second Quarter of 2022

Signs agreement with the intention to divest Applied, Food, and Enterprise Services businesses

  • Second quarter revenue of $1.23 billion; 0% reported growth, 8% non-COVID organic growth
  • Second quarter GAAP EPS from continuing operations of $1.42; adjusted EPS of $2.32
  • Initiates third quarter and raises full year guidance
  • Earnings call moved to today at 8:00 a.m. Eastern Time. Webcast information below

WALTHAM, Mass.--(BUSINESS WIRE)--Aug. 1, 2022-- PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the second quarter ended July 3, 2022.

The Company reported GAAP earnings per share from continuing operations of $1.42, as compared to GAAP earnings per share from continuing operations of $2.19 in the same period a year ago. GAAP revenue for the quarter was $1.23 billion, as compared to $1.23 billion in the same period a year ago. GAAP operating income from continuing operations for the quarter was $251 million, as compared to $332 million for the same period a year ago. GAAP operating profit margin was 20.4% as a percentage of revenue, as compared to 27.1% in the same period a year ago.

Adjusted earnings per share from continuing operations for the quarter was $2.32, as compared to $2.83 in the same period a year ago. Adjusted revenue for the quarter was $1.23 billion, as compared to $1.23 billion in the same period a year ago. Adjusted operating income from continuing operations for the quarter was $402 million, as compared to $411 million for the same period a year ago. Adjusted operating profit margin was 32.7% as a percentage of adjusted revenue, as compared to 33.5% in the same period a year ago.

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

“Our strong performance in the quarter is a testament to our operational and commercial execution as well as our portfolio evolution over the last three years,” said Prahlad Singh, president and chief executive officer of PerkinElmer. “With today’s divestiture announcement, we position the company to transform into a pureplay, high growth, high margin life sciences and diagnostics company with even more focus to capitalize on attractive end markets. This transformation will in turn lead to significant financial strength, allowing us to continue to scale and accelerate our innovation investments, which help our customers bridge the chasm from research to clinic, and clinic to cure.”

Financial Overview by Reporting Segment for the Second Quarter

Discovery & Analytical Solutions

  • Second quarter 2022 revenue was $661 million, as compared to $513 million in the same period a year ago. Reported revenue increased 29% and organic revenue increased 13% as compared to the same period a year ago.
  • Second quarter 2022 operating income from continuing operations was $70 million, as compared to $64 million for the same period a year ago.
  • Second quarter 2022 adjusted operating income was $178 million, as compared to $101 million for the same period a year ago.

Diagnostics

  • Second quarter 2022 revenue was $569 million, as compared to $716 million for the same period a year ago. Reported revenue decreased 20% and organic revenue decreased 19% as compared to the same period a year ago.
  • Second quarter 2022 operating income from continuing operations was $201 million, as compared to $286 million for the same period a year ago.
  • Second quarter 2022 adjusted operating income was $245 million, as compared to $328 million for the same period a year ago.

Initiates Third Quarter and Raises Full Year 2022 Guidance

For the third quarter of 2022, the Company forecasts revenue of approximately $1.02-1.03 billion and adjusted earnings per share to be in a range $1.40-1.45.

For the full year 2022, the Company now forecasts revenue of $4.60-4.64 billion and adjusted earnings per share of $7.80-7.90.

Guidance for the third quarter and full year is provided on a non-GAAP basis and cannot be reconciled to the closest GAAP measures without unreasonable effort due to the unpredictability of the amounts and timing of events affecting the items the Company excludes from these non-GAAP measures. The timing and amounts of such events and items could be material to the Company’s results prepared in accordance with GAAP.

Announces Agreement with the Intention to Divest Applied, Food, and Enterprise Services Businesses

The Company is also announcing today that it has entered into an agreement with the intention to divest its Applied, Food, and Enterprise Services businesses to New Mountain Capital for a total consideration of $2.45 billion. The transaction is expected to close in the first quarter of 2023, subject to regulatory approvals and other customary closing conditions. Management will provide additional detail regarding this transaction in a separate release and on today’s webcast. A presentation highlighting this transaction will be available on the Investors section of the Company’s website, www.perkinelmer.com.

Webcast Information

The Company will discuss its second quarter 2022 results, its outlook for business trends, and its intended divestiture of its Analytical, Food, and Enterprise Services businesses during a webcast on August 1, 2022, at 8:00 a.m. Eastern Time. A live audio webcast and presentation will be available on the Investors section of the Company’s website, www.perkinelmer.com.

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," “estimates”, "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) the effect of the COVID-19 pandemic on our sales and operations; (3) fluctuations in the global economic and political environments; (4) our failure to introduce new products in a timely manner; (5) our ability to execute acquisitions and divestitures, such as the divestiture of the Applied, Food and Enterprise Services businesses, license technologies, or to successfully integrate acquired businesses and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (6) our ability to compete effectively; (7) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (8) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (9) disruptions in the supply of raw materials and supplies; (10) our ability to retain key personnel; (11) significant disruption in our information technology systems, or cybercrime; (12) our ability to realize the full value of our intangible assets; (13) our failure to adequately protect our intellectual property; (14) the loss of any of our licenses or licensed rights; (15) the manufacture and sale of products exposing us to product liability claims; (16) our failure to maintain compliance with applicable government regulations; (17) regulatory changes; (18) our failure to comply with healthcare industry regulations; (19) economic, political and other risks associated with foreign operations; (20) the United Kingdom’s withdrawal from the European Union; (21) our ability to obtain future financing; (22) restrictions in our credit agreements; (23) discontinuation or replacement of LIBOR; (24) significant fluctuations in our stock price; (25) reduction or elimination of dividends on our common stock; and (26) 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 is a leading, global provider of end-to-end solutions that help scientists, researchers and clinicians better diagnose disease, discover new and more personalized drugs, monitor the safety and quality of our food, and drive environmental and applied analysis excellence. With an 85-year legacy of advancing science and a mission of innovating for a healthier world, our dedicated team of more than 16,000 collaborates closely with commercial, government, academic and healthcare customers to deliver reagents, assays, instruments, automation, informatics and strategic services that accelerate workflows, deliver actionable insights and support improved decision making. We are also deeply committed to good corporate citizenship through our dynamic ESG and sustainability programs. The Company reported revenues of approximately $5 billion in 2021, serves customers in 190 countries, and is a component of the S&P 500 index. Additional information is available at www.perkinelmer.com. Follow PerkinElmer on LinkedIn, Twitter, Facebook, Instagram, and YouTube.

PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED INCOME STATEMENTS
 
 

Three Months Ended

 

Six Months Ended

(In thousands, except per share data)

July 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

 
 
Revenue

$

1,229,569

 

$

1,228,471

 

$

2,489,011

 

$

2,536,160

 

 
Cost of revenue

 

563,406

 

 

543,277

 

 

1,143,617

 

 

1,065,820

 

Selling, general and administrative expenses

 

330,025

 

 

281,819

 

 

664,418

 

 

533,229

 

Research and development expenses

 

73,352

 

 

65,824

 

 

149,961

 

 

126,040

 

Restructuring and other, net

 

11,928

 

 

5,063

 

 

25,312

 

 

10,807

 

 
Operating income from continuing operations

 

250,858

 

 

332,488

 

 

505,703

 

 

800,264

 

 
Interest income

 

(762

)

 

(367

)

 

(1,357

)

 

(778

)

Interest expense

 

27,128

 

 

16,750

 

 

55,516

 

 

30,876

 

Change in fair value of financial securities

 

(2,910

)

 

(8,633

)

 

9,215

 

 

(27,931

)

Other (income) expense, net

 

2,930

 

 

(1,319

)

 

257

 

 

(8,442

)

 
Income from continuing operations, before income taxes

 

224,472

 

 

326,057

 

 

442,072

 

 

806,539

 

 
Provision for income taxes

 

45,220

 

 

80,089

 

 

85,817

 

 

181,228

 

 
Income from continuing operations

 

179,252

 

 

245,968

 

 

356,255

 

 

625,311

 

 
Loss on disposition of discontinued operations, before income taxes

 

-

 

 

-

 

 

-

 

 

-

 

Provision for income taxes on discontinued operations and dispositions

 

40

 

 

38

 

 

81

 

 

76

 

 
Loss from discontinued operations and dispositions

 

(40

)

 

(38

)

 

(81

)

 

(76

)

 
Net income

$

179,212

 

$

245,930

 

$

356,174

 

$

625,235

 

 
 
Diluted earnings per share:
 
Income from continuing operations

$

1.42

 

$

2.19

 

$

2.81

 

$

5.56

 

 
Loss from discontinued operations and dispositions

 

(0.00

)

 

(0.00

)

 

(0.00

)

 

(0.00

)

 
Net income

$

1.42

 

$

2.19

 

$

2.81

 

$

5.56

 

 
 
Weighted average diluted shares of common stock outstanding

 

126,509

 

 

112,417

 

 

126,581

 

 

112,456

 

 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
 
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations

$

1.42

 

$

2.19

 

$

2.81

 

$

5.56

 

Amortization of intangible assets

 

0.80

 

 

0.53

 

 

1.61

 

 

1.01

 

Debt extinguishment costs

 

0.00

 

 

-

 

 

0.00

 

 

-

 

Purchase accounting adjustments

 

0.14

 

 

0.03

 

 

0.28

 

 

0.07

 

Acquisition and divestiture-related costs

 

0.17

 

 

0.09

 

 

0.34

 

 

0.13

 

Change in fair value of financial securities

 

(0.02

)

 

(0.08

)

 

0.07

 

 

(0.25

)

Significant litigation matters and settlements

 

(0.01

)

 

-

 

 

(0.01

)

 

-

 

Restructuring and other, net

 

0.09

 

 

0.05

 

 

0.20

 

 

0.10

 

Tax on above items

 

(0.27

)

 

(0.11

)

 

(0.58

)

 

(0.21

)

Significant tax items

 

-

 

 

0.13

 

 

-

 

 

0.13

 

Adjusted EPS

$

2.32

 

$

2.83

 

$

4.73

 

$

6.55

 

 
(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) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
 
 
DAS Reported revenue $

660,541

 

$

512,829

 

$

1,262,907

 

$

967,438

 

Purchase accounting adjustments

-

 

822

 

-

 

1,849

 

Adjusted revenue

660,541

 

513,651

 

1,262,907

 

969,287

 

 
Reported operating income from continued operations

70,112

 

64,155

 

84,627

 

107,102

 

OP%

10.6

%

12.5

%

6.7

%

11.1

%

Amortization of intangible assets

67,537

 

23,072

 

135,265

 

43,492

 

Purchase accounting adjustments

17,264

 

1,473

 

34,546

 

3,649

 

Acquisition and divestiture-related costs

15,023

 

8,597

 

28,288

 

14,505

 

Significant litigation matters and settlements

(1,686

)

-

 

(1,261

)

-

 

Restructuring and other, net

9,444

 

3,615

 

22,825

 

7,744

 

Adjusted operating income

177,694

 

100,912

 

304,290

 

176,492

 

Adjusted OP%

26.9

%

19.6

%

24.1

%

18.2

%

 
Diagnostics Reported revenue

569,028

 

715,642

 

1,226,104

 

1,568,722

 

Purchase accounting adjustments

203

 

199

 

406

 

398

 

Adjusted revenue

569,231

 

715,841

 

1,226,510

 

1,569,120

 

 
Reported operating income from continued operations

201,232

 

286,280

 

459,244

 

727,747

 

OP%

35.4

%

40.0

%

37.5

%

46.4

%

Amortization of intangible assets

33,354

 

36,489

 

68,276

 

70,226

 

Purchase accounting adjustments

705

 

2,107

 

1,427

 

4,378

 

Acquisition and divestiture-related costs

6,880

 

2,051

 

14,119

 

5,810

 

Restructuring and other, net

2,484

 

1,448

 

2,487

 

3,063

 

Adjusted operating income

244,655

 

328,375

 

545,553

 

811,224

 

Adjusted OP%

43.0

%

45.9

%

44.5

%

51.7

%

 
Corporate Reported operating loss

(20,486

)

(17,947

)

(38,168

)

(34,585

)

 
Continuing Operations Reported revenue $

1,229,569

 

$

1,228,471

 

$

2,489,011

 

$

2,536,160

 

Purchase accounting adjustments

203

 

1,021

 

406

 

2,247

 

Adjusted revenue

1,229,772

 

1,229,492

 

2,489,417

 

2,538,407

 

 
Reported operating income from continued operations

250,858

 

332,488

 

505,703

 

800,264

 

OP%

20.4

%

27.1

%

20.3

%

31.6

%

Amortization of intangible assets

100,891

 

59,561

 

203,541

 

113,718

 

Purchase accounting adjustments

17,969

 

3,580

 

35,973

 

8,027

 

Acquisition and divestiture-related costs

21,903

 

10,648

 

42,407

 

20,315

 

Significant litigation matters and settlements

(1,686

)

-

 

(1,261

)

-

 

Restructuring and other, net

11,928

 

5,063

 

25,312

 

10,807

 

Adjusted operating income $

401,863

 

$

411,340

 

$

811,675

 

$

953,131

 

Adjusted OP%

32.7

%

33.5

%

32.6

%

37.5

%

 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
(In thousands) July 3, 2022 January 2, 2022
 
Current assets:
Cash and cash equivalents

$

360,860

$

618,319

Accounts receivable, net

 

932,131

 

1,023,792

Inventories, net

 

624,297

 

624,714

Other current assets

 

190,484

 

173,955

Total current assets

 

2,107,772

 

2,440,780

 
Property, plant and equipment, net

 

533,645

 

545,605

Operating lease right-of-use assets

 

209,332

 

207,775

Intangible assets, net

 

3,771,221

 

4,063,104

Goodwill

 

7,243,492

 

7,416,584

Other assets, net

 

324,245

 

326,706

Total assets

$

14,189,707

$

15,000,554

 
Current liabilities:
Current portion of long-term debt

$

4,180

$

4,240

Accounts payable

 

333,711

 

355,458

Accrued expenses and other current liabilities

 

705,922

 

854,046

Total current liabilities

 

1,043,813

 

1,213,744

 
Long-term debt

 

4,484,314

 

4,979,737

Long-term liabilities

 

1,311,435

 

1,480,469

Operating lease liabilities

 

182,990

 

185,359

Total liabilities

 

7,022,552

 

7,859,309

 
Total stockholders' equity

 

7,167,155

 

7,141,245

Total liabilities and stockholders' equity

$

14,189,707

$

15,000,554

 
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Three Months Ended Six Months Ended
July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
(In thousands) (In thousands)
 
Operating activities:
Net income

$

179,212

 

$

245,930

 

$

356,174

 

$

625,235

 

Loss from discontinued operations and dispositions, net of income taxes

 

40

 

 

38

 

 

81

 

 

76

 

Income from continuing operations

 

179,252

 

 

245,968

 

 

356,255

 

 

625,311

 

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

 

16,029

 

 

7,204

 

 

31,292

 

 

12,361

 

Restructuring and other, net

 

11,928

 

 

5,063

 

 

25,312

 

 

10,807

 

Depreciation and amortization

 

119,406

 

 

75,636

 

 

239,457

 

 

145,822

 

Change in fair value of contingent consideration

 

670

 

 

237

 

 

1,363

 

 

477

 

Amortization of deferred debt financing costs and accretion of discounts

 

2,071

 

 

828

 

 

3,852

 

 

1,724

 

Change in fair value of financial securities

 

(2,910

)

 

(8,633

)

 

9,215

 

 

(27,931

)

Debt extinguishment costs

 

369

 

 

-

 

 

488

 

 

-

 

Amortization of acquired inventory revaluation

 

16,856

 

 

2,322

 

 

33,724

 

 

5,303

 

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

 

(21,579

)

 

(9,920

)

 

47,485

 

 

155,270

 

Inventories

 

(23,329

)

 

22,246

 

 

(70,297

)

 

7,239

 

Accounts payable

 

(33,733

)

 

(21,747

)

 

(7,382

)

 

(26,795

)

Accrued expenses and other

 

(167,545

)

 

(31,342

)

 

(290,064

)

 

(148,226

)

Net cash provided by operating activities of continuing operations

 

97,485

 

 

287,862

 

 

380,700

 

 

761,362

 

 
Investing activities:
Capital expenditures

 

(23,154

)

 

(20,364

)

 

(52,585

)

 

(34,675

)

Purchases of investments

 

(4,250

)

 

(10,507

)

 

(27,245

)

 

(14,507

)

Proceeds from disposition of businesses and assets

 

1,054

 

 

-

 

 

1,054

 

 

-

 

Cash paid for acquisitions, net of cash, cash equivalents and restricted cash acquired

 

(2,005

)

 

(259,154

)

 

(5,885

)

 

(702,697

)

Net cash used in investing activities of continuing operations

 

(28,355

)

 

(290,025

)

 

(84,661

)

 

(751,879

)

 
Financing Activities:
Payments on borrowings

 

-

 

 

(20,000

)

 

(220,000

)

 

(763,545

)

Proceeds from borrowings

 

-

 

 

145,000

 

 

220,000

 

 

729,000

 

Payments of term loan

 

(350,000

)

 

-

 

 

(450,000

)

 

-

 

Payments of senior debt

 

-

 

 

(339,605

)

 

-

 

 

(339,605

)

Proceeds from sale of senior debt

 

-

 

 

-

 

 

-

 

 

799,856

 

Payments of debt financing costs

 

-

 

 

(360

)

 

-

 

 

(8,242

)

Settlement of cash flow hedges

 

-

 

 

(11,940

)

 

(762

)

 

(5,935

)

Net payments on other credit facilities

 

239

 

 

(2,027

)

 

(825

)

 

(11,826

)

Payments for acquisition-related contingent consideration

 

(5

)

 

-

 

 

(5

)

 

-

 

Proceeds from issuance of common stock under stock plans

 

4,444

 

 

9,198

 

 

5,841

 

 

14,185

 

Purchases of common stock

 

(456

)

 

(30,145

)

 

(56,048

)

 

(72,924

)

Dividends paid

 

(8,830

)

 

(7,845

)

 

(17,667

)

 

(15,697

)

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

 

(354,608

)

 

(257,724

)

 

(519,466

)

 

325,267

 

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

 

(23,341

)

 

(3,810

)

 

(33,977

)

 

(10,659

)

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

 

(308,819

)

 

(263,697

)

 

(257,404

)

 

324,091

 

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

 

670,752

 

 

990,401

 

 

619,337

 

 

402,613

 

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

$

361,933

 

$

726,704

 

$

361,933

 

$

726,704

 

 
 
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

$

360,860

 

$

572,810

 

$

360,860

 

$

572,810

 

Restricted cash included in other current assets

 

1,073

 

 

1,750

 

 

1,073

 

 

1,750

 

Restricted cash included in other assets

 

-

 

 

152,144

 

 

-

 

 

152,144

 

Total cash, cash equivalents and restricted cash

$

361,933

 

$

726,704

 

$

361,933

 

$

726,704

 

 
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

July 3, 2022 July 4, 2021
Adjusted revenue:
Revenue

$

1,229.6

 

$

1,228.5

 

Purchase accounting adjustments

 

0.2

 

 

1.0

 

Adjusted revenue

$

1,229.8

 

$

1,229.5

 

 
Adjusted gross margin:
Gross margin

$

666.2

 

54.2

%

$

685.2

 

55.8

%

Amortization of intangible assets

 

39.2

 

3.2

%

 

22.7

 

1.8

%

Purchase accounting adjustments

 

17.2

 

1.4

%

 

3.3

 

0.3

%

Acquisition and divestiture-related costs

 

1.5

 

0.1

%

 

-

 

0.0

%

Adjusted gross margin

$

724.1

 

58.9

%

$

711.2

 

57.8

%

 
Adjusted SG&A:
SG&A

$

330.0

 

26.8

%

$

281.8

 

22.9

%

Amortization of intangible assets

 

(61.7

)

-5.0

%

 

(36.9

)

-3.0

%

Purchase accounting adjustments

 

(0.7

)

-0.1

%

 

(0.2

)

0.0

%

Acquisition and divestiture-related costs

 

(19.0

)

-1.5

%

 

(10.6

)

-0.9

%

Significant litigation matters and settlements

 

1.7

 

0.1

%

 

-

 

0.0

%

Adjusted SG&A

$

250.3

 

20.3

%

$

234.0

 

19.0

%

 
Adjusted R&D:
R&D

$

73.4

 

6.0

%

$

65.8

 

5.4

%

Purchase accounting adjustments

 

(0.1

)

0.0

%

 

-

 

0.0

%

Acquisition and divestiture-related costs

 

(1.3

)

-0.1

%

 

-

 

0.0

%

Adjusted R&D

$

72.0

 

5.9

%

$

65.8

 

5.4

%

 
Adjusted operating income:
Operating income

$

250.9

 

20.4

%

$

332.5

 

27.1

%

Amortization of intangible assets

 

100.9

 

8.2

%

 

59.6

 

4.8

%

Purchase accounting adjustments

 

18.0

 

1.5

%

 

3.6

 

0.3

%

Acquisition and divestiture-related costs

 

21.9

 

1.8

%

 

10.6

 

0.9

%

Significant litigation matters and settlements

 

(1.7

)

-0.1

%

 

-

 

0.0

%

Restructuring and other, net

 

11.9

 

1.0

%

 

5.1

 

0.4

%

Adjusted operating income

$

401.9

 

32.7

%

$

411.3

 

33.5

%

 
PKI

Three Months Ended

July 3, 2022 July 4, 2021
Adjusted EPS:
GAAP EPS

$

1.42

 

$

2.19

 

Discontinued operations, net of income taxes

 

(0.00

)

 

(0.00

)

GAAP EPS from continuing operations

 

1.42

 

 

2.19

 

Amortization of intangible assets

 

0.80

 

 

0.53

 

Debt extinguishment costs

 

0.00

 

 

-

 

Purchase accounting adjustments

 

0.14

 

 

0.03

 

Acquisition and divestiture-related costs

 

0.17

 

 

0.09

 

Change in fair value of financial securities

 

(0.02

)

 

(0.08

)

Significant litigation matters and settlements

 

(0.01

)

 

-

 

Restructuring and other, net

 

0.09

 

 

0.05

 

Tax on above items

 

(0.27

)

 

(0.11

)

Significant tax items

 

-

 

 

0.13

 

Adjusted EPS

$

2.32

 

$

2.83

 

 
DAS

Three Months Ended

July 3, 2022 July 4, 2021
Adjusted revenue:
Revenue

$

660.5

 

$

512.8

 

Purchase accounting adjustments

 

-

 

 

0.8

 

Adjusted revenue

$

660.5

 

$

513.7

 

 
Adjusted operating income:
Operating income

$

70.1

 

10.6

%

$

64.2

 

12.5

%

Amortization of intangible assets

 

67.5

 

10.2

%

 

23.1

 

4.5

%

Purchase accounting adjustments

 

17.3

 

2.6

%

 

1.5

 

0.3

%

Acquisition and divestiture-related costs

 

15.0

 

2.3

%

 

8.6

 

1.7

%

Significant litigation matters and settlements

 

(1.7

)

-0.3

%

 

-

 

0.0

%

Restructuring and other, net

 

9.4

 

1.4

%

 

3.6

 

0.7

%

Adjusted operating income

$

177.7

 

26.9

%

$

100.9

 

19.6

%

 
Diagnostics

Three Months Ended

July 3, 2022 July 4, 2021
Adjusted revenue:
Revenue

$

569.0

 

$

715.6

 

Purchase accounting adjustments

 

0.2

 

 

0.2

 

Adjusted revenue

$

569.2

 

$

715.8

 

 
Adjusted operating income:
Operating income

$

201.2

 

35.4

%

$

286.3

 

40.0

%

Amortization of intangible assets

 

33.4

 

5.9

%

 

36.5

 

5.1

%

Purchase accounting adjustments

 

0.7

 

0.1

%

 

2.1

 

0.3

%

Acquisition and divestiture-related costs

 

6.9

 

1.2

%

 

2.1

 

0.3

%

Restructuring and other, net

 

2.5

 

0.4

%

 

1.4

 

0.2

%

Adjusted operating income

$

244.7

 

43.0

%

$

328.4

 

45.9

%

 
(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

July 3, 2022 July 4, 2021
Adjusted revenue:
Revenue

$

2,489.0

 

$

2,536.2

 

Purchase accounting adjustments

 

0.4

 

 

2.2

 

Adjusted revenue

$

2,489.4

 

$

2,538.4

 

 
Adjusted gross margin:
Gross margin

$

1,345.4

 

54.1

%

$

1,470.3

 

58.0

%

Amortization of intangible assets

 

79.3

 

3.2

%

 

43.0

 

1.7

%

Purchase accounting adjustments

 

34.4

 

1.4

%

 

7.6

 

0.3

%

Acquisition and divestiture-related costs

 

3.2

 

0.1

%

 

-

 

0.0

%

Adjusted gross margin

$

1,462.3

 

58.7

%

$

1,520.9

 

59.9

%

 
Adjusted SG&A:
SG&A

$

664.4

 

26.7

%

$

533.2

 

21.0

%

Amortization of intangible assets

 

(124.3

)

-5.0

%

 

(70.7

)

-2.8

%

Purchase accounting adjustments

 

(1.4

)

-0.1

%

 

(0.5

)

0.0

%

Acquisition and divestiture-related costs

 

(36.4

)

-1.5

%

 

(20.3

)

-0.8

%

Significant litigation matters and settlements

 

1.3

 

0.1

%

 

-

 

0.0

%

Adjusted SG&A

$

503.5

 

20.2

%

$

441.7

 

17.4

%

 
Adjusted R&D:
R&D

$

150.0

 

6.0

%

$

126.0

 

5.0

%

Purchase accounting adjustments

 

(0.1

)

0.0

%

 

-

 

0.0

%

Acquisition and divestiture-related costs

 

(2.8

)

-0.1

%

 

-

 

0.0

%

Adjusted R&D

$

147.1

 

5.9

%

$

126.0

 

5.0

%

 
Adjusted operating income:
Operating income

$

505.7

 

20.3

%

$

800.3

 

31.6

%

Amortization of intangible assets

 

203.5

 

8.2

%

 

113.7

 

4.5

%

Purchase accounting adjustments

 

36.0

 

1.4

%

 

8.0

 

0.3

%

Acquisition and divestiture-related costs

 

42.4

 

1.7

%

 

20.3

 

0.8

%

Significant litigation matters and settlements

 

(1.3

)

-0.1

%

 

-

 

0.0

%

Restructuring and other, net

 

25.3

 

1.0

%

 

10.8

 

0.4

%

Adjusted operating income

$

811.7

 

32.6

%

$

953.1

 

37.5

%

 
PKI

Six Months Ended

July 3, 2022 July 4, 2021
Adjusted EPS:
GAAP EPS

$

2.81

 

$

5.56

 

Discontinued operations, net of income taxes

 

(0.00

)

 

(0.00

)

GAAP EPS from continuing operations

 

2.81

 

 

5.56

 

Amortization of intangible assets

 

1.61

 

 

1.01

 

Debt extinguishment costs

 

0.00

 

 

-

 

Purchase accounting adjustments

 

0.28

 

 

0.07

 

Acquisition and divestiture-related costs

 

0.34

 

 

0.13

 

Change in fair value of financial securities

 

0.07

 

 

(0.25

)

Significant litigation matters and settlements

 

(0.01

)

 

-

 

Restructuring and other, net

 

0.20

 

 

0.10

 

Tax on above items

 

(0.58

)

 

(0.21

)

Significant tax items

 

-

 

 

0.13

 

Adjusted EPS

$

4.73

 

$

6.55

 

 
DAS

Six Months Ended

July 3, 2022 July 4, 2021
Adjusted revenue:
Revenue

$

1,262.9

 

$

967.4

 

Purchase accounting adjustments

 

-

 

 

1.8

 

Adjusted revenue

$

1,262.9

 

$

969.3

 

 
Adjusted operating income:
Operating income

$

84.6

 

6.7

%

$

107.1

 

11.1

%

Amortization of intangible assets

 

135.3

 

10.7

%

 

43.5

 

4.5

%

Purchase accounting adjustments

 

34.5

 

2.7

%

 

3.6

 

0.4

%

Acquisition and divestiture-related costs

 

28.3

 

2.2

%

 

14.5

 

1.5

%

Significant litigation matters and settlements

 

(1.3

)

-0.1

%

 

-

 

0.0

%

Restructuring and other, net

 

22.8

 

1.8

%

 

7.7

 

0.8

%

Adjusted operating income

$

304.3

 

24.1

%

$

176.5

 

18.2

%

 
Diagnostics

Six Months Ended

July 3, 2022 July 4, 2021
Adjusted revenue:
Revenue

$

1,226.1

 

$

1,568.7

 

Purchase accounting adjustments

 

0.4

 

 

0.4

 

Adjusted revenue

$

1,226.5

 

$

1,569.1

 

 
Adjusted operating income:
Operating income

$

459.2

 

37.5

%

$

727.7

 

46.4

%

Amortization of intangible assets

 

68.3

 

5.6

%

 

70.2

 

4.5

%

Purchase accounting adjustments

 

1.4

 

0.1

%

 

4.4

 

0.3

%

Acquisition and divestiture-related costs

 

14.1

 

1.2

%

 

5.8

 

0.4

%

Restructuring and other, net

 

2.5

 

0.2

%

 

3.1

 

0.2

%

Adjusted operating income

$

545.6

 

44.5

%

$

811.2

 

51.7

%

 
(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

 

 

July 3, 2022

 

Organic revenue growth:

 

 

Reported revenue growth

 

0%

 

Less: effect of foreign exchange rates

 

-4%

 

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

 

10%

 

Organic revenue growth

 

-5%

 

Less: revenue growth from COVID products

 

-13%

 

Organic revenue growth excluding COVID

 

8%

 

 

 

 

 

 

 

DAS

 

Three Months Ended

 

 

July 3, 2022

 

Organic revenue growth:

 

 

Reported revenue growth

 

29%

 

Less: effect of foreign exchange rates

 

-5%

 

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

 

20%

 

Organic revenue growth

 

13%

 

 

 

 

 

 

 

Diagnostics

 

Three Months Ended

 

 

July 3, 2022

 

Organic revenue growth:

 

 

Reported revenue growth

 

-20%

 

Less: effect of foreign exchange rates

 

-4%

 

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

 

2%

 

Organic revenue growth

 

-19%

 

 
(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 revenue from recent acquisitions and divestitures and 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 “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 related term “non-COVID organic revenue growth” to refer to the measure of comparing current period organic revenue excluding revenue from COVID related products and services with the corresponding period of the prior year excluding revenue from COVID related products and services.

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, asset impairments, 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 settlements, asset impairments, 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 and purchase accounting adjustments. 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 net interest and other expense” to refer to GAAP net interest and other expense, excluding adjustments for mark-to-market accounting on post-retirement benefits, changes in the value of financial securities and debt extinguishment costs.

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 and settlements, significant environmental charges, asset impairments, and restructuring and other 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 and settlements, significant environmental charges, changes in the value of financial securities, disposition of businesses and assets, net, asset impairments and restructuring and other charges. We also exclude adjustments for mark-to-market accounting on post-retirement benefits, therefore only our projected costs have been used to calculate this 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 from hedges 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, fixed assets 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, incentive awards, stock-based compensation, interest expense, foreign exchange gains and losses, 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.
  • Asset impairments —we incur expense related to asset impairments. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • 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 other charges —restructuring and other charges consist of employee severance, other exit costs as well as the cost of terminating certain lease agreements or contracts as well as costs associated with relocating facilities. 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 and settlements —we incur expenses related to significant litigation matters, including the costs to settle or resolve various claims and legal proceedings. 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 was recorded.
  • Changes in value of financial securities —we exclude the impact of changes in the value of financial securities. 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.

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 and settlements, significant environmental charges, changes in the fair value of financial securities, adjustments for mark-to-market accounting on post-retirement benefits, disposition of businesses and assets, net, restructuring and other 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:
Steve Willoughby (781) 663-5677
steve.willoughby@perkinelmer.com

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

Source: PerkinElmer, Inc.