PerkinElmer, Inc.
May 5, 2016
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PerkinElmer Announces Financial Results for the First Quarter of 2016

WALTHAM, Mass.--(BUSINESS WIRE)-- PerkinElmer, Inc. (NYSE: PKI), a global leader focused on improving the health and safety of people and the environment, today reported financial results for the first quarter ended April 3, 2016.

The Company reported GAAP earnings per share from continuing operations of $0.43, as compared to $0.36 in the first quarter of 2015. GAAP revenue in the first quarter of 2016 was $538.7 million, as compared to $526.9 million in the first quarter of 2015. GAAP operating income from continuing operations for the first quarter of 2016 was $68.8 million, as compared to $57.4 million in the first quarter of 2015.

Adjusted earnings per share was $0.56, as compared to $0.50 in the first quarter of 2015. Adjusted revenue for the quarter was $538.9 million, as compared to $527.2 million in the first quarter of 2015. Adjusted operating income for the first quarter of 2016 was $89.8 million, as compared to $82.8 million for the same period a year ago. Adjusted operating profit margin was 16.7% as a percentage of adjusted revenue, as compared to 15.7% for the same period a year ago. Adjustments for the Company's non-GAAP financial measures have been noted in the attached reconciliations.

"I am pleased with our excellent start to the year as evidenced by our strong and broad-based financial performance," said Robert Friel, chairman and chief executive officer of PerkinElmer. "We continue to be encouraged by the success of our operational initiatives as well as the impact from recent growth and productivity investments giving us confidence to raise our full year earnings outlook."


Cash Flow

For the first quarter of 2016, GAAP operating cash flow from continuing operations was $32.1 million, as compared to $37.6 million in the comparable period of 2015.

Financial Overview by Reporting Segment for the First Quarter of 2016

Human Health

Environmental Health

Updated Financial Guidance - Full Year 2016

For the full year 2016, the Company now forecasts GAAP earnings per share from continuing operations in the range of $2.29 to $2.39 and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $2.75 to $2.85, which incorporates $0.06 related to a stronger performance from the first quarter of 2016 and $0.04 from more favorable foreign exchange rates.

Conference Call Information

The Company will discuss its first quarter results and its outlook for business trends in a conference call on May 5, 2016 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 85461014.

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

Use of Non-GAAP Financial Measures

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

Factors Affecting Future Performance

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities 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; (18) our ability to obtain future financing; (19) restrictions in our credit agreements; (20) our ability to realize the full value of our intangible assets; (21) significant fluctuations in our stock price; (22) reduction or elimination of dividends on our common stock; and (23) other factors which we describe under the caption "Risk Factors" in our most recent annual report on Form 10-K 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 improving the health and safety of people and the environment. The Company reported revenue of approximately $2.3 billion in 2015, has about 8,000 employees serving customers in more than 150 countries, and is a component of the S&P 500 Index. Additional information is available through 1-877-PKI-NYSE, or at www.perkinelmer.com.

               
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
 
 
Three Months Ended
(In thousands, except per share data) April 3, 2016 March 29, 2015
 
 
Revenue $ 538,684 $ 526,901
 
Cost of revenue 288,587 291,527
Selling, general and administrative expenses 147,545 145,873
Research and development expenses   33,785     32,120  
 
Operating income from continuing operations 68,767 57,381
 
Interest income (110 ) (209 )
Interest expense 9,841 9,388
Other expense, net   1,355     242  
 
Income from continuing operations, before income taxes 57,681 47,960
 
Provision for income taxes   10,176     7,649  
 
Income from continuing operations 47,505 40,311
 
Loss from discontinued operations, before income taxes (3 ) (37 )
Loss on disposition of discontinued operations, before income taxes - (13 )
Provision for (benefit from) income taxes on discontinued operations   36     (73 )
 
(Loss) gain from discontinued operations   (39 )   23  
 
Net income $ 47,466   $ 40,334  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.43 $ 0.36
 
(Loss) gain from discontinued operations   (0.00 )   0.00  
 
Net income $ 0.43   $ 0.36  
 
 
Weighted average diluted shares of common stock outstanding 111,195 113,439
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
                     
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations $ 0.43 $ 0.36
Amortization of intangible assets, net of income taxes 0.11 0.11
Purchase accounting adjustments, net of income taxes   0.01     0.03  
Adjusted EPS $ 0.56   $ 0.50  
 
  (1) amounts may not sum due to rounding                  

                 
PerkinElmer, Inc. and Subsidiaries
REVENUE AND OPERATING INCOME (LOSS)
 
 
 
Three Months Ended
(In thousands, except percentages) April 3, 2016 March 29, 2015
 
 
Human Health Reported revenue $ 332,442 $ 326,053
Purchase accounting adjustments 175 269
Adjusted revenue 332,617 326,322
 
Reported operating income from continued operations 54,727 55,882
OP% 16.5% 17.1%
Amortization of intangible assets 13,771 15,473
Purchase accounting adjustments 1,525 300
Acquisition-related costs 343 72
Adjusted operating income 70,366 71,727
Adjusted OP% 21.2% 22.0%
 
Environmental Health Reported revenue 206,242 200,848
 
Reported operating income from continued operations 25,597 11,346
OP% 12.4% 5.6%
Amortization of intangible assets 5,267 4,365
Purchase accounting adjustments 134 4,850
Acquisition-related costs 23 123
Adjusted operating income 31,021 20,684
Adjusted OP% 15.0% 10.3%
 
Corporate Reported operating loss (11,557) (9,847)
Mark to market on postretirement benefits (3) 234
Adjusted operating loss (11,560) (9,613)
 
 
Continuing Operations Reported revenue $ 538,684 $ 526,901
Purchase accounting adjustments 175 269
Adjusted revenue 538,859 527,170
 
Reported operating income from continued operations 68,767 57,381
OP% 12.8% 10.9%
Amortization of intangible assets 19,038 19,838
Purchase accounting adjustments 1,659 5,150
Acquisition-related costs 366 195
Mark to market on postretirement benefits (3) 234
Adjusted operating income $ 89,827 $ 82,798
Adjusted OP% 16.7% 15.7%
 
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

             
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
 
 
 
(In thousands) April 3, 2016 January 3, 2016
 
Current assets:
Cash and cash equivalents $ 210,731 $ 237,932
Accounts receivable, net 436,755 439,015
Inventories 314,060 288,028
Other current assets   88,274     68,186  
Total current assets   1,049,820     1,033,161  
 
Property, plant and equipment:
At cost 507,774 494,956
Accumulated depreciation   (339,649 )   (327,927 )
Property, plant and equipment, net 168,125 167,029
Marketable securities and investments 1,379 1,586
Intangible assets, net 481,598 490,811
Goodwill 2,296,146 2,276,149
Other assets, net   213,653     197,559  
Total assets $ 4,210,721   $ 4,166,295  
 
Current liabilities:
Current portion of long-term debt $ 1,135 $ 1,123
Accounts payable 159,480 152,726
Short-term accrued restructuring and contract termination charges 10,933 17,090
Accrued expenses and other current liabilities 380,899 388,446
Current liabilities of discontinued operations   2,100     2,100  
Total current liabilities   554,547     561,485  
 
Long-term debt 1,119,830 1,011,762
Long-term liabilities   486,864     482,607  
Total liabilities   2,161,241     2,055,854  
 
Total stockholders' equity   2,049,480     2,110,441  
Total liabilities and stockholders' equity $ 4,210,721   $ 4,166,295  
 
 
PREPARED IN ACCORDANCE WITH GAAP

           
PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Three Months Ended
April 3, 2016 March 29, 2015
(In thousands)
 
Operating activities:
Net income $ 47,466 $ 40,334
Loss from (gain on) discontinued operations, net of income taxes   39     (23 )
Income from continuing operations   47,505     40,311  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 3,953 3,987
Amortization of deferred debt financing costs and accretion of discounts 356 312
Depreciation and amortization 26,957 28,334
Amortization of acquired inventory revaluation 131 4,850
Changes in assets and liabilities which provided (used) cash, excluding
effects from companies purchased and divested:
Accounts receivable, net 12,444 37,582
Inventories (15,779 ) (22,498 )
Accounts payable 4,217 (12,335 )
Accrued expenses and other   (47,705 )   (42,895 )
Net cash provided by operating activities of continuing operations 32,079 37,648
Net cash (used in) provided by operating activities of discontinued operations   (39 )   15  
Net cash provided by operating activities   32,040     37,663  
 
Investing activities:
Capital expenditures (7,808 ) (4,479 )
Changes in restricted cash balances - 59
Proceeds from disposition of a business 1,000 -
Activity related to acquisitions and investments, net of cash and cash equivalents acquired   (10,484 )   (4,619 )
Net cash used in investing activities   (17,292 )   (9,039 )
 
Financing Activities:
Payments on revolving credit facility (75,000 ) (98,000 )
Proceeds from revolving credit facility 183,000 61,000
Settlement of cash flow hedges 2,630 15,563
Net payments on other credit facilities (275 ) (263 )
Payments for acquisition-related contingent consideration (93 ) -
Proceeds from issuance of common stock under stock plans 1,238 8,840
Repurchases of common stock (151,352 ) (3,954 )
Dividends paid   (7,843 )   (7,876 )
Net cash used in financing activities   (47,695 )   (24,690 )
 
Effect of exchange rate changes on cash and cash equivalents   5,746     (9,831 )
 
Net decrease in cash and cash equivalents (27,201 ) (5,897 )
Cash and cash equivalents at beginning of period   237,932     174,821  
Cash and cash equivalents at end of period $ 210,731   $ 168,924  
 
 
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

April 3, 2016

March 29, 2015

 
Adjusted revenue:
Revenue $ 538.7 $ 526.9
Purchase accounting adjustments     0.2                   0.3        
Adjusted revenue $   538.9                 $ 527.2        
 
Adjusted gross margin:
Gross margin $ 250.1 46.4 % $ 235.4 44.7 %
Amortization of intangible assets 8.5 1.6 % 10.7 2.0 %
Purchase accounting adjustments 0.3 0.1 % 5.1 1.0 %
Mark to market on postretirement benefits     (0.0 )       0.0 %         0.2     0.0 %
Adjusted gross margin $   258.9         48.0 %       $ 251.5     47.7 %
 
Adjusted SG&A:
SG&A $ 147.5 27.4 % $ 145.9 27.7 %
Amortization of intangible assets (10.4 ) -1.9 % (9.0 ) -1.7 %
Purchase accounting adjustments (1.3 ) -0.2 % (0.0 ) 0.0 %
Acquisition-related costs     (0.4 )       -0.1 %         (0.2 )   0.0 %
Adjusted SG&A $   135.5         25.1 %       $ 136.7     25.9 %
 
Adjusted R&D:
R&D $ 33.8 6.3 % $ 32.1 6.1 %
Amortization of intangible assets     (0.2 )       0.0 %         (0.1 )   0.0 %
Adjusted R&D $   33.6         6.2 %       $ 32.0     6.1 %
 
Adjusted operating income:
Operating income $ 68.8 12.8 % $ 57.4 10.9 %
Amortization of intangible assets 19.0 3.5 % 19.8 3.8 %
Purchase accounting adjustments 1.7 0.3 % 5.2 1.0 %
Acquisition-related costs 0.4 0.1 % 0.2 0.0 %
Mark to market on postretirement benefits     (0.0 )       0.0 %         0.2     0.0 %
Adjusted operating income $   89.8         16.7 %       $ 82.8     15.7 %
                             
PKI
Three Months Ended

April 3, 2016

March 29, 2015

 
Adjusted EPS:
GAAP EPS $ 0.43 $ 0.36
Discontinued operations, net of income taxes     (0.00 )                 0.00        
GAAP EPS from continuing operations 0.43 0.36
Amortization of intangible assets, net of income taxes 0.11 0.11
Purchase accounting adjustments, net of income taxes 0.01 0.03
Acquisition-related costs, net of income taxes 0.00 0.00
Mark to market on postretirement benefits, net of income taxes     (0.00 )                 0.00        
Adjusted EPS $   0.56                 $ 0.50        
 

PKI

Three Months Ended

April 3, 2016

March 29, 2015

Tax expense related non-GAAP adjustment on adjusted EPS:

 

 Amortization of intangible assets

 

 (0.06

)

 

 (0.06

)

 

 Purchase accounting adjustments

 

 (0.00

)

 

 (0.01

)

 

 Acquisition-related costs

 

 (0.00

)

 

 -

 

 Mark to market on postretirement benefits

 

 

 -

       

 

       

 (0.00

)

 

 

 

Tax expense related non-GAAP adjustment on adjusted EPS

 

 $

 (0.06

)

     

 

     

 $

 (0.08

)

 

 

 
 
PKI  
Twelve Months Ended

January 1, 2017

Adjusted EPS: Projected
GAAP EPS from continuing operations $ 2.29 - $2.39
Amortization of intangible assets, net of income taxes 0.44
Purchase accounting adjustments, net of income taxes 0.02
Acquisition-related costs, net of income taxes 0.00
Mark to market on postretirement benefits, net of income taxes                       0.00    
Adjusted EPS                     $ 2.75 - $2.85    
                             
Human Health
Three Months Ended

April 3, 2016

March 29, 2015

 
Adjusted revenue:
Revenue $ 332.4 $ 326.1
Purchase accounting adjustments     0.2                   0.3        
Adjusted revenue $   332.6                 $ 326.3        
 
Adjusted operating income:
Operating income $ 54.7 16.5 % $ 55.9 17.1 %
Amortization of intangible assets 13.8 4.1 % 15.5 4.7 %
Purchase accounting adjustments 1.5 0.5 % 0.3 0.1 %
Acquisition-related costs     0.3         0.1 %         0.1     0.0 %
Adjusted operating income $   70.4         21.2 %       $ 71.7     22.0 %
 
 
                             
Environmental Health
Three Months Ended

April 3, 2016

March 29, 2015

 
Revenue:
Revenue $ 206.2 $ 200.8
 
Adjusted operating income:
Operating income $ 25.6 12.4 % $ 11.3 5.6 %
Amortization of intangible assets 5.3 2.6 % 4.4 2.2 %
Purchase accounting adjustments 0.1 0.1 % 4.9 2.4 %
Acquisition-related costs     0.0         0.0 %         0.1     0.1 %
Adjusted operating income $   31.0         15.0 %       $ 20.7     10.3 %
 
(1) amounts may not sum due to rounding

       
PerkinElmer, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
 
   
PKI
Three Months Ended

April 3, 2016

Organic revenue growth:
Reported revenue growth 2%
Less: effect of foreign exchange rates -2%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses   0%
Organic revenue growth   4%
 
   
Human Health
Three Months Ended

April 3, 2016

Organic revenue growth:
Reported revenue growth 2%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses   0%
Organic revenue growth   3%
 
   
Environmental Health
Three Months Ended

April 3, 2016

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%
 
(1) amounts may not sum due to rounding

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, management believes that, in order to properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring 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 translation 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-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-related costs, 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-related costs, 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 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, significant litigation matters, significant environmental charges, adjustments for mark-to-market accounting on post-retirement benefits, 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 are also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and discontinued operations, and determine the bonus payments for senior management and employees.

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

Source: PerkinElmer, Inc.

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