PerkinElmer, Inc.
Nov 2, 2017
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PerkinElmer Announces Financial Results for the Third Quarter of 2017

WALTHAM, Mass.--(BUSINESS WIRE)-- PerkinElmer, Inc. (NYSE: PKI), a global leader committed to innovating for a healthier world, today reported financial results for the third quarter ended October 1, 2017.

The Company reported GAAP earnings per share from continuing operations of $0.87, as compared to $0.49 in the third quarter of 2016. GAAP revenue in the third quarter of 2017 was $554.3 million, as compared to $514.5 million in the third quarter of 2016. GAAP operating income from continuing operations for the third quarter of 2017 was $79.8 million, as compared to $75.8 million in the third quarter of 2016.

Adjusted earnings per share was $0.73, as compared to $0.64 in the third quarter of 2016. Adjusted revenue for the quarter was $554.5 million, as compared to $514.7 million in the third quarter of 2016. Adjusted operating income for the third quarter of 2017 was $107.0 million, as compared to $97.7 million for the same period a year ago. Adjusted operating profit margin was 19.3% as a percentage of adjusted revenue, up 30 basis points as compared to the same period a year ago. Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations.

"We continued to drive solid execution across all of our strategic growth initiatives during the third quarter, while also delivering strong near term financial results," said Robert Friel, chairman and chief executive officer of PerkinElmer. "As a result, we remain confident in our improving growth trajectory as these initiatives should enhance our revenue growth in 2018 and beyond."

Financial Overview by Reporting Segment for the Third Quarter of 2017

Discovery & Analytical Solutions

Diagnostics

Updates Financial Guidance - Full Year 2017

For the full year 2017, the Company now forecasts GAAP earnings per share from continuing operations in the range of $2.55 to $2.57 and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $2.87 to $2.89.

Conference Call Information

The Company will discuss its third quarter results and its outlook for business trends in a conference call on November 2, 2017 at 5:00 p.m. Eastern Time. To access the call, please dial (541) 797-2422 prior to the scheduled conference call time and provide the access code 91901490.

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

Use of Non-GAAP Financial Measures

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

Factors Affecting Future Performance

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities, acquisitions and divestitures. Words such as "believes," "intends," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) fluctuations in the global economic and political environments; (3) our failure to introduce new products in a timely manner; (4) our ability to execute acquisitions, including the planned consummation of our agreement to acquire EUROIMMUN, 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; (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 is a global leader committed to innovating for a healthier world. Our dedicated team of 9,000 employees worldwide are passionate about providing customers with an unmatched experience as they help solve critical issues especially impacting the diagnostics, discovery and analytical solutions markets. Our innovative detection, imaging, informatics and service capabilities, combined with deep market knowledge and expertise, help customers gain earlier and more accurate insights to improve lives and the world around us. The Company reported revenue of approximately $2.1 billion in 2016, serves customers in more than 150 countries, and is a component of the S&P 500 Index. Additional information is available through 1-877-PKI-NYSE, or at www.perkinelmer.com.

 

PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED INCOME STATEMENTS

               
 

Three Months Ended

Nine Months Ended

(In thousands, except per share data)

October 1, 2017

October 2, 2016

October 1, 2017

October 2, 2016

 
 
Revenue $ 554,275 $ 514,489 $ 1,615,352 $ 1,548,747
 
Cost of revenue 285,453 265,939 849,416 811,557
Selling, general and administrative expenses 150,859 142,600 443,896 438,090
Research and development expenses 34,887 29,513 101,737 91,352
Restructuring and contract termination charges, net   3,269     656     12,920     5,124  
 
Operating income from continuing operations 79,807 75,781 207,383 202,624
 
Interest income (802 ) (124 ) (1,512 ) (361 )
Interest expense 10,974 10,998 32,510 30,778
Loss (Gain) on disposition of businesses and assets, net - - 301 (5,562 )
Other (income) expense, net   (35,419 )   389     (39,745 )   2,887  
 
Income from continuing operations, before income taxes 105,054 64,518 215,829 174,882
 
Provision for income taxes   8,508     10,601     20,495     21,465  
 
Income from continuing operations 96,546 53,917 195,334 153,417
 
Income from discontinued operations, before income taxes - 5,447 650 18,564
(Loss) gain on disposition of discontinued operations, before income taxes (206 ) 630 180,171 619
Provision for income taxes on discontinued operations and dispositions   5,262     1,867     42,405     3,150  
 
(Loss) gain from discontinued operations and dispositions   (5,468 )   4,210     138,416     16,033  
 
Net income $ 91,078   $ 58,127   $ 333,750   $ 169,450  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.87 $ 0.49 $ 1.77 $ 1.39
 
(Loss) gain from discontinued operations and dispositions   (0.05 )   0.04     1.25     0.15  
 
Net income $ 0.82   $ 0.53   $ 3.02   $ 1.54  
 
 
Weighted average diluted shares of common stock outstanding 110,993 110,078 110,653 110,372
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
                         
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.87 $ 0.49 $ 1.77 $ 1.39
Amortization of intangible assets 0.16 0.15 0.47 0.49
Purchase accounting adjustments 0.01 0.04 0.06 0.10
Acquisition and divestiture-related costs (0.28 ) 0.00 (0.27 ) 0.01
Disposition of businesses and assets, net - - 0.00 (0.05 )
Mark to market on postretirement benefits - - (0.00 ) (0.00 )
Restructuring and contract termination charges, net 0.03 0.01 0.12 0.05
Tax on above items   (0.06 )   (0.05 )   (0.20 )   (0.21 )
Adjusted EPS $ 0.73   $ 0.64   $ 1.94   $ 1.77  
 
(1) amounts may not sum due to rounding

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

Three Months Ended

Nine Months Ended

(In thousands, except percentages)

October 1, 2017

October 2, 2016

October 1, 2017

October 2, 2016

 
 
DAS Reported revenue $ 385,382 $ 365,089 $ 1,130,270 $ 1,103,040
 
Reported operating income from continued operations 47,615 46,051 129,675 127,137
OP% 12.4 % 12.6 % 11.5 % 11.5 %
Amortization of intangible assets 12,826 12,310 37,453 40,324
Purchase accounting adjustments 16 16 48 441
Acquisition and divestiture-related costs - 45 348 353
Restructuring and contract termination charges, net   1,729     655     9,716     4,740  
Adjusted operating income   62,186     59,077     177,240     172,995  
Adjusted OP% 16.1 % 16.2 % 15.7 % 15.7 %
 
Diagnostics Reported revenue 168,893 149,400 485,082 445,707
Purchase accounting adjustments   185     176     556     527  
Adjusted Revenue   169,078     149,576     485,638     446,234  
 
Reported operating income from continued operations 44,054 41,618 115,105 113,232
OP% 26.1 % 27.9 % 23.7 % 25.4 %
Amortization of intangible assets 4,850 4,563 14,807 13,548
Purchase accounting adjustments 851 4,242 6,400 10,252
Acquisition and divestiture-related costs 5,417 65 11,368 284
Restructuring and contract termination charges, net   1,540     1     3,204     384  
Adjusted operating income   56,712     50,489     150,884     137,700  
Adjusted OP% 33.5 % 33.8 % 31.1 % 30.9 %
 
Corporate Reported operating loss (11,862 ) (11,888 ) (37,397 ) (37,745 )
Mark to market on postretirement benefits   -     -     (46 )   (3 )
Adjusted operating loss   (11,862 )   (11,888 )   (37,443 )   (37,748 )
 
 
Continuing Operations Reported revenue $ 554,275 $ 514,489 $ 1,615,352 $ 1,548,747
Purchase accounting adjustments   185     176     556     527  
Adjusted Revenue   554,460     514,665     1,615,908     1,549,274  
 
Reported operating income from continued operations 79,807 75,781 207,383 202,624
OP% 14.4 % 14.7 % 12.8 % 13.1 %
Amortization of intangible assets 17,676 16,873 52,260 53,872
Purchase accounting adjustments 867 4,258 6,448 10,693
Acquisition and divestiture-related costs 5,417 110 11,716 637
Mark to market on postretirement benefits - - (46 ) (3 )
Restructuring and contract termination charges, net   3,269     656     12,920     5,124  
Adjusted operating income $ 107,036   $ 97,678   $ 290,681   $ 272,947  
Adjusted OP% 19.3 % 19.0 % 18.0 % 17.6 %
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

 
PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
       
 
 
(In thousands)

October 1, 2017

January 1, 2017

 
Current assets:
Cash and cash equivalents $ 709,488 $ 359,265
Accounts receivable, net 440,649 425,588
Inventories, net 295,176 246,847
Other current assets 100,347 99,246
Current assets of discontinued operations   -     58,985  
Total current assets   1,545,660     1,189,931  
 
Property, plant and equipment:
At cost 475,106 427,903
Accumulated depreciation   (317,441 )   (282,409 )
Property, plant and equipment, net 157,665 145,494
Intangible assets, net 441,425 420,224
Goodwill 2,373,009 2,247,966
Other assets, net 221,196 204,679
Long-term assets of discontinued operations   -     68,389  
Total assets $ 4,738,955   $ 4,276,683  
 
Current liabilities:
Current portion of long-term debt $ 1,294 $ 1,172
Accounts payable 163,735 168,033
Short-term accrued restructuring and contract termination charges 10,066 7,479
Accrued expenses and other current liabilities 420,263 399,700
Current liabilities of discontinued operations   2,154     26,971  
Total current liabilities   597,512     603,355  
 
Long-term debt 1,109,269 1,045,254
Long-term liabilities 496,145 459,544
Long-term liabilities of discontinued operations   -     14,960  
Total liabilities   2,202,926     2,123,113  
 
Total stockholders' equity   2,536,029     2,153,570  
Total liabilities and stockholders' equity $ 4,738,955   $ 4,276,683  
 
PREPARED IN ACCORDANCE WITH GAAP

 
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
               
 

Three Months Ended

Nine Months Ended

October 1, 2017

October 2, 2016

October 1, 2017

October 2, 2016

(In thousands) (In thousands)
 
Operating activities:
Net income $ 91,078 $ 58,127 $ 333,750 $ 169,450
Loss (income) from discontinued operations and dispositions, net of income taxes   5,468     (4,210 )   (138,416 )   (16,033 )
Income from continuing operations   96,546     53,917     195,334     153,417  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 4,412 3,774 16,179 13,449
Restructuring and contract termination charges, net 3,269 656 12,920 5,124
Depreciation and amortization 26,002 24,267 75,507 74,507
Change in fair value of contingent consideration 651 4,051 1,560 9,678
Amortization of deferred debt financing costs and accretion of discounts 705 756 1,936 1,507
Loss (gain) on disposition of businesses and assets, net - - 301 (5,562 )
Amortization of acquired inventory revaluation - - 4,240 396
Changes in assets and liabilities which provided (used) cash, excluding
effects from companies acquired:
Accounts receivable, net 5,756 (2,283 ) 10,971 5,081
Inventories (10,451 ) (3,414 ) (25,208 ) (14,022 )
Accounts payable 8,396 5,146 (12,459 ) 5,863
Accrued expenses and other   (65,516 )   (13,115 )   (116,118 )   (68,248 )
Net cash provided by operating activities of continuing operations 69,770 73,755 165,163 181,190
Net cash (used in) provided by operating activities of discontinued operations   (11,266 )   (140 )   (4,806 )   20,702  
Net cash provided by operating activities   58,504     73,615     160,357     201,892  
 
Investing activities:
Capital expenditures (10,889 ) (8,542 ) (22,362 ) (24,411 )
Settlement of cash flow hedges 60,420 - 60,420 -
Proceeds from surrender of life insurance policies - - 45 44
Changes in restricted cash balances 15 - 17,218 (2,000 )
Proceeds from disposition of businesses - - - 21,000
Activity related to acquisitions, net of cash and cash equivalents acquired   -     (61,440 )   (123,578 )   (71,924 )
Net cash provided by (used in) investing activities of continuing operations 49,546 (69,982 ) (68,257 ) (77,291 )
Net cash (used in) provided by investing activities of discontinued operations   (4,203 )   (449 )   272,779     (900 )
Net cash provided by (used in) investing activities   45,343     (70,431 )   204,522     (78,191 )
 
Financing Activities:
Payments on borrowings (1,015 ) (609,507 ) (146,965 ) (804,507 )
Proceeds from borrowings - 135,507 146,952 375,507
Proceeds from sale of senior debt - 546,190 - 546,190
Payments of debt issuance costs - (7,868 ) - (7,868 )
Settlement of cash flow hedges (7,225 ) 396 (11,539 ) 1,674
Net payments on other credit facilities (295 ) (282 ) (872 ) (835 )
Payments for acquisition-related contingent consideration - (14 ) (8,940 ) (113 )
Proceeds from issuance of common stock under stock plans 781 3,128 14,004 12,081
Purchases of common stock (215 ) (96 ) (3,480 ) (151,447 )
Dividends paid   (7,714 )   (7,658 )   (23,077 )   (23,131 )
Net cash (used in) provided by financing activities of continuing operations (15,683 ) 59,796 (33,917 ) (52,449 )
Net cash used in financing activities of discontinued operations   -     -     (533 )   (193 )
Net cash (used in) provided by financing activities (15,683 ) 59,796 (34,450 ) (52,642 )
 
Effect of exchange rate changes on cash and cash equivalents   5,016     600     19,794     2,672  
 
Net increase in cash and cash equivalents 93,180 63,580 350,223 73,731
Cash and cash equivalents at beginning of period   616,308     248,083     359,265     237,932  
Cash and cash equivalents at end of period $ 709,488   $ 311,663   $ 709,488   $ 311,663  
 
 
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

October 1, 2017

   

October 2, 2016

 
 
Adjusted revenue:
Revenue $ 554.3 $ 514.5
Purchase accounting adjustments   0.2           0.2      
Adjusted revenue $ 554.5         $ 514.7      
 
Adjusted gross margin:
Gross margin $ 268.8 48.5 % $ 248.6 48.3 %
Amortization of intangible assets 7.1 1.3 % 7.0 1.4 %
Purchase accounting adjustments   0.2     0.0 %     0.2     0.0 %
Adjusted gross margin $ 276.1     49.8 %   $ 255.7     49.7 %
 
Adjusted SG&A:
SG&A $ 150.9 27.2 % $ 142.6 27.7 %
Amortization of intangible assets (10.5 ) -1.9 % (9.8 ) -1.9 %
Purchase accounting adjustments (0.7 ) -0.1 % (4.1 ) -0.8 %
Acquisition and divestiture-related expenses   (5.4 )   -1.0 %     (0.1 )   0.0 %
Adjusted SG&A $ 134.3     24.2 %   $ 128.6     25.0 %
 
Adjusted R&D:
R&D $ 34.9 6.3 % $ 29.5 5.7 %
Amortization of intangible assets   (0.1 )   0.0 %     (0.1 )   0.0 %
Adjusted R&D $ 34.8     6.3 %   $ 29.5     5.7 %
 
Adjusted operating income:
Operating income $ 79.8 14.4 % $ 75.8 14.7 %
Amortization of intangible assets 17.7 3.2 % 16.9 3.3 %
Purchase accounting adjustments 0.9 0.2 % 4.3 0.8 %
Acquisition and divestiture-related expenses 5.4 1.0 % 0.1 0.0 %
Restructuring and contract termination charges, net   3.3     0.6 %     0.7     0.1 %
Adjusted operating income $ 107.0     19.3 %   $ 97.7     19.0 %
             
PKI
Three Months Ended

October 1, 2017

October 2, 2016

 
Adjusted EPS:
GAAP EPS $ 0.82 $ 0.53
Discontinued operations, net of income taxes   (0.05 )         0.04      
GAAP EPS from continuing operations 0.87 0.49
Amortization of intangible assets 0.16 0.15
Purchase accounting adjustments 0.01 0.04
Acquisition and divestiture-related expenses (0.28 ) 0.00
Restructuring and contract termination charges, net 0.03 0.01
Tax on above items   (0.06 )         (0.05 )    
Adjusted EPS $ 0.73         $ 0.64      
             

DAS

Three Months Ended

October 1, 2017

October 2, 2016

 
Adjusted revenue:
Revenue $ 385.4 $ 365.1
 
Adjusted operating income:
Operating income $ 47.6 12.4 % $ 46.1 12.6 %
Amortization of intangible assets 12.8 3.3 % 12.3 3.4 %
Purchase accounting adjustments 0.0 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses - 0.0 % 0.0 0.0 %
Restructuring and contract termination charges, net   1.7     0.4 %     0.7     0.2 %
Adjusted operating income $ 62.2     16.1 %   $ 59.1     16.2 %
             
Diagnostics
Three Months Ended

October 1, 2017

October 2, 2016

 
Revenue:
Revenue $ 168.9 $ 149.4
Purchase accounting adjustments   0.2           0.2      
Adjusted revenue $ 169.1         $ 149.6      
 
Adjusted operating income:
Operating income $ 44.1 26.1 % $ 41.6 27.9 %
Amortization of intangible assets 4.9 2.9 % 4.6 3.1 %
Purchase accounting adjustments 0.9 0.5 % 4.2 2.8 %
Acquisition and divestiture-related expenses 5.4 3.2 % 0.1 0.0 %
Restructuring and contract termination charges, net   1.5     0.9 %     0.0     0.0 %
Adjusted operating income $ 56.7     33.5 %   $ 50.5     33.8 %
 
 
(1) amounts may not sum due to rounding
 

PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
     
(In millions, except per share data and percentages) PKI
Nine Months Ended

October 1, 2017

   

October 2, 2016

 
 
Adjusted revenue:
Revenue $ 1,615.4 $ 1,548.7
Purchase accounting adjustments   0.6           0.5      
Adjusted revenue $ 1,615.9         $ 1,549.3      
 
Adjusted gross margin:
Gross margin $ 765.9 47.4 % $ 737.2 47.6 %
Amortization of intangible assets 21.3 1.3 % 23.3 1.5 %
Purchase accounting adjustments 4.8 0.3 % 1.0 0.1 %
Mark to market on postretirement benefits   (0.0 )   0.0 %     (0.0 )   0.0 %
Adjusted gross margin $ 792.1     49.0 %   $ 761.5     49.1 %
 
Adjusted SG&A:
SG&A $ 443.9 27.5 % $ 438.1 28.3 %
Amortization of intangible assets (30.7 ) -1.9 % (30.1 ) -1.9 %
Purchase accounting adjustments (1.6 ) -0.1 % (9.7 ) -0.6 %
Acquisition and divestiture-related expenses   (11.7 )   -0.7 %     (0.6 )   0.0 %
Adjusted SG&A $ 399.9     24.7 %   $ 397.6     25.7 %
 
Adjusted R&D:
R&D $ 101.7 6.3 % $ 91.4 5.9 %
Amortization of intangible assets   (0.2 )   0.0 %     (0.5 )   0.0 %
Adjusted R&D $ 101.5     6.3 %   $ 90.9     5.9 %
 
Adjusted operating income:
Operating income $ 207.4 12.8 % $ 202.6 13.1 %
Amortization of intangible assets 52.3 3.2 % 53.9 3.5 %
Purchase accounting adjustments 6.4 0.4 % 10.7 0.7 %
Acquisition and divestiture-related expenses 11.7 0.7 % 0.6 0.0 %
Significant litigation matter - 0.0 % - 0.0 %
Mark to market on postretirement benefits (0.0 ) 0.0 % (0.0 ) 0.0 %
Restructuring and contract termination charges, net   12.9     0.8 %     5.1     0.3 %
Adjusted operating income $ 290.7     18.0 %   $ 272.9     17.6 %
 
PKI
Nine Months Ended

October 1, 2017

October 2, 2016

 
Adjusted EPS:
GAAP EPS $ 3.02 $ 1.54
Discontinued operations   1.25           0.15      
GAAP EPS from continuing operations 1.77 1.39
Amortization of intangible assets 0.47 0.49
Purchase accounting adjustments 0.06 0.10
Acquisition and divestiture-related expenses (0.27 ) 0.01
Gain on disposition of businesses and assets, net 0.00 (0.05 )
Mark to market on postretirement benefits (0.00 ) (0.00 )
Restructuring and contract termination charges, net 0.12 0.05
Tax on above items   (0.20 )         (0.21 )    
Adjusted EPS $ 1.94         $ 1.77      
 
PKI

Twelve Months Ended
December 31, 2017

Adjusted EPS: Projected
GAAP EPS from continuing operations $ 2.55 - $2.57
Amortization of intangible assets 0.63
Purchase accounting adjustments 0.07
Acquisition and divestiture-related expenses (0.24 )
Euroimmun integration expenses 0.00
Gain on disposition of businesses and assets, net 0.00
Mark to market on postretirement benefits 0.00
Restructuring and contract termination charges 0.12
Tax on above items           (0.26 )    
Adjusted EPS         $ 2.87 - $2.89      
 
DAS
Nine Months Ended

October 1, 2017

October 2, 2016

 
Adjusted revenue:
Revenue $ 1,130.3 $ 1,103.0
 
Adjusted operating income:
Operating income $ 129.7 11.5 % $ 127.1 11.5 %
Amortization of intangible assets 37.5 3.3 % 40.3 3.7 %
Purchase accounting adjustments 0.0 0.0 % 0.4 0.0 %
Acquisition and divestiture-related expenses 0.3 0.0 % 0.4 0.0 %
Restructuring and contract termination charges, net   9.7     0.9 %     4.7     0.4 %
Adjusted operating income $ 177.2     15.7 %   $ 173.0     15.7 %
             
Diagnostics
Nine Months Ended

October 1, 2017

October 2, 2016

 
Revenue:
Revenue $ 485.1 $ 445.7
Purchase accounting adjustments   0.6           0.5      
Adjusted revenue $ 485.6         $ 446.2      
 
Adjusted operating income:
Operating income $ 115.1 23.7 % $ 113.2 25.4 %
Amortization of intangible assets 14.8 3.1 % 13.5 3.0 %
Purchase accounting adjustments 6.4 1.3 % 10.3 2.3 %
Acquisition and divestiture-related expenses 11.4 2.3 % 0.3 0.1 %
Restructuring and contract termination charges, net   3.2     0.7 %     0.4     0.1 %
Adjusted operating income $ 150.9     31.1 %   $ 137.7     30.9 %
 
 
(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
October 1, 2017

Organic revenue growth:
Reported revenue growth 8 %
Less: effect of foreign exchange rates 1 %
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 2 %
Organic revenue growth 5 %
 
 
DAS

Three Months Ended
October 1, 2017

Organic revenue growth:
Reported revenue growth 6 %
Less: effect of foreign exchange rates 1 %
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0 %
Organic revenue growth 4 %
 
 
Diagnostics

Three Months Ended
October 1, 2017

Organic revenue growth:
Reported revenue growth 13 %
Less: effect of foreign exchange rates 1 %
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 7 %
Organic revenue growth 5 %
 
(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 acquisitions, 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, 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 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 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 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 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 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 use the related terms "adjusted operating profit percentage," "adjusted operating profit margin," or "adjusted operating margin" to refer to adjusted operating income as a percentage of adjusted revenue.

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

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

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

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

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

PerkinElmer, Inc.
Investor Relations:
Tommy J. Thomas, CPA, 781-663-5889
tommy.thomas@perkinelmer.com
or
Media Contact:
Fara Goldberg 781-663-5699
fara.goldberg@perkinelmer.com

Source: PerkinElmer, Inc.

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