PKI
$80.91
Perkinelmer
$.25
.31%
Earnings Details
3rd Quarter September 2018
Wednesday, October 31, 2018 4:15:00 PM
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Summary

Perkinelmer Misses

Perkinelmer (PKI) reported 3rd Quarter September 2018 earnings of $0.90 per share on revenue of $674.3 million. The consensus earnings estimate was $0.92 per share on revenue of $674.4 million. The Earnings Whisper number was $0.94 per share. Revenue grew 21.7% on a year-over-year basis.

The company said it expects 2018 earnings of approximately $3.60 per share. The company's previous guidance was earnings of approximately $3.65 per share and the current consensus earnings estimate is $3.65 per share for the year ending December 31, 2018.

PerkinElmer Inc is a provider of technology, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets.

Results
Reported Earnings
$0.90
Earnings Whisper
$0.94
Consensus Estimate
$0.92
Reported Revenue
$674.3 Mil
Revenue Estimate
$674.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

PerkinElmer Announces Financial Results for the Third Quarter of 2018

  • GAAP revenue growth of 22% to $674.3 million; Core organic revenue growth of 7%
  • GAAP earnings per share from continuing operations of $0.68; Adjusted earnings per share of $0.90, an increase of 23%

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 September 30, 2018.

The Company reported GAAP earnings per share from continuing operations of $0.68, as compared to GAAP earnings per share from continuing operations of $0.87 in the third quarter of 2017. GAAP revenue for the quarter was $674.3 million, as compared to $554.3 million in the third quarter of 2017. GAAP operating income from continuing operations for the quarter was $80.2 million, as compared to $78.0 million in the third quarter of 2017. GAAP operating profit margin was 11.9% as a percentage of revenue.

Adjusted earnings per share from continuing operations for the quarter was $0.90, as compared to $0.73 in the third quarter of 2017. Adjusted revenue for the quarter was $674.5 million, as compared to $554.5 million in the third quarter of 2017. Adjusted operating income from continuing operations for the quarter was $128.6 million, as compared to $105.3 million for the same period a year ago. Adjusted operating profit margin was 19.1% as a percentage of adjusted revenue.

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

“We were pleased with the high-single digit organic revenue growth and greater than 20% adjusted EPS growth in the third quarter,” said Robert Friel, chairman and chief executive officer of PerkinElmer. “This performance reinforces our belief that we have both the organization and the businesses to continue to increase our top-line growth rate and profitability.”

Financial Overview by Reporting Segment for the Third Quarter of 2018

Discovery & Analytical Solutions

  • Revenue was $406.2 million, as compared to $385.4 million for the third quarter of 2017. Reported revenue increased 5% and organic revenue increased 7%.
  • Operating income from continuing operations was $48.4 million, as compared to $47.3 million for the comparable prior period.
  • Adjusted operating income was $68.0 million, as compared to $61.8 million in the third quarter of 2017.

Diagnostics

  • Revenue was $268.1 million, as compared to $168.9 million for the third quarter of 2017. Reported revenue increased 59% and organic revenue increased 8%.
  • Operating income from continuing operations was $47.4 million, as compared to $43.4 million for the comparable prior period.
  • Adjusted operating income was $76.2 million, as compared to $56.0 million in the third quarter of 2017.

Updates Financial Guidance – Full Year 2018

For the full year 2018, the Company previously forecast GAAP earnings per share from continuing operations of $2.39 and, on a non-GAAP basis, adjusted earnings per share of $3.65. The Company now forecasts GAAP earnings per share from continuing operations of $2.37, and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $3.60.

Conference Call Information

The Company will discuss its third quarter results and its outlook for business trends in a conference call on October 31, 2018 at 5:00 p.m. Eastern Time. To access the call, please dial (720) 405-2250 prior to the scheduled conference call time and provide the access code 7286991.

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

Use of Non-GAAP Financial Measures

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

Factors Affecting Future Performance

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to estimates and projections of future earnings per share, cash flow and revenue growth and other financial results, developments relating to our customers and end-markets, and plans concerning business development opportunities, acquisitions and divestitures. Words such as "believes," "intends," "anticipates," "plans," "expects," "projects," "forecasts," "will" and similar expressions, and references to guidance, are intended to identify forward-looking statements. Such statements are based on management's current assumptions and expectations and no assurances can be given that our assumptions or expectations will prove to be correct. A number of important risk factors could cause actual results to differ materially from the results described, implied or projected in any forward-looking statements. These factors include, without limitation: (1) markets into which we sell our products declining or not growing as anticipated; (2) fluctuations in the global economic and political environments; (3) our failure to introduce new products in a timely manner; (4) our ability to execute acquisitions and license technologies, or to successfully integrate acquired businesses such as EUROIMMUN and licensed technologies into our existing business or to make them profitable, or successfully divest businesses; (5) our failure to adequately protect our intellectual property; (6) the loss of any of our licenses or licensed rights; (7) our ability to compete effectively; (8) fluctuation in our quarterly operating results and our ability to adjust our operations to address unexpected changes; (9) significant disruption in third-party package delivery and import/export services or significant increases in prices for those services; (10) disruptions in the supply of raw materials and supplies; (11) the manufacture and sale of products exposing us to product liability claims; (12) our failure to maintain compliance with applicable government regulations; (13) regulatory changes; (14) our failure to comply with healthcare industry regulations; (15) economic, political and other risks associated with foreign operations; (16) our ability to retain key personnel; (17) significant disruption in our information technology systems; (18) our ability to obtain future financing; (19) restrictions in our credit agreements; (20) the United Kingdom’s intention to withdraw from the European Union; (21) our ability to realize the full value of our intangible assets; (22) significant fluctuations in our stock price; (23) reduction or elimination of dividends on our common stock; and (24) other factors which we describe under the caption "Risk Factors" in our most recent quarterly report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.

About PerkinElmer

PerkinElmer, Inc. is a global leader focused on innovating for a healthier world. The Company reported revenue of approximately $2.3 billion in 2017, has about 11,000 employees serving customers in more than 150 countries, and is a component of the S&P 500 Index. Additional information is available through 1-877-PKI-NYSE, or at www.perkinelmer.com.

 

PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED INCOME STATEMENTS

 

   
 
           

Three Months Ended

Nine Months Ended

(In thousands, except per share data)

September 30, 2018

October 1, 2017

September 30, 2018

October 1, 2017

 
 
Revenue $ 674,313 $ 554,275 $ 2,021,647 $ 1,615,352
 
Cost of revenue 341,986 285,308 1,056,958 849,027
Selling, general and administrative expenses 196,769 152,775 601,374 449,642
Research and development expenses 48,848 34,885 142,028 101,731
Restructuring and contract termination charges, net   6,508     3,269     13,086     12,920  
 
Operating income from continuing operations 80,202 78,038 208,201 202,032
 
Interest income (316 ) (802 ) (754 ) (1,512 )
Interest expense 16,684 10,974 50,745 32,510
Gain on disposition of businesses and assets, net (13,031 ) - (13,031 ) 301
Other income, net   (1,176 )   (37,188 )   (7,013 )   (45,096 )
 
Income from continuing operations, before income taxes 78,041 105,054 178,254 215,829
 
Provision for income taxes   2,596     8,508     12,101     20,495  
 
Income from continuing operations 75,445 96,546 166,153 195,334
 
Income from discontinued operations, before income taxes - - - 650
(Loss) gain on disposition of discontinued operations, before income taxes (308 ) (206 ) (859 ) 180,171
(Benefit from) provision for income taxes on discontinued operations and dispositions   (1,411 )   5,262     (1,341 )   42,405  
 
Gain (loss) from discontinued operations and dispositions   1,103     (5,468 )   482     138,416  
 
Net income $ 76,548   $ 91,078   $ 166,635   $ 333,750  
 
 
Diluted earnings per share:
Income from continuing operations $ 0.68 $ 0.87 $ 1.49 $ 1.77
 
Gain (loss) from discontinued operations and dispositions   0.01     (0.05 )   0.00     1.25  
 
Net income $ 0.69   $ 0.82   $ 1.49   $ 3.02  
 
 
Weighted average diluted shares of common stock outstanding 111,747 110,993 111,510 110,653
 
 
ABOVE PREPARED IN ACCORDANCE WITH GAAP
 
                         
Additional Supplemental Information (1):
(per share, continuing operations)
 
GAAP EPS from continuing operations

$

0.68 $ 0.87 $ 1.49 $ 1.77
Amortization of intangible assets 0.32 0.16 0.90 0.47
Purchase accounting adjustments 0.04 0.01 0.27 0.06
Significant litigation matter 0.01 - 0.05 -
Acquisition and divestiture-related costs 0.02 (0.28 ) 0.05 (0.27 )
Disposition of businesses and assets, net (0.12 ) - (0.12 ) 0.00
Mark to market on postretirement benefits - - - (0.00 )
Restructuring and contract termination charges, net 0.06 0.03 0.12 0.12
Tax on above items (0.03 ) (0.06 ) (0.27 ) (0.20 )
Impact of tax act   (0.06 )   -     (0.05 )   -  
Adjusted EPS $ 0.90   $ 0.73   $ 2.43   $ 1.94  
 
(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)

September 30,
2018

October 1, 2017

September 30,
2018

October 1, 2017

 
 
DAS Reported revenue

 

$

406,166

 

$

385,382

 

$

1,233,319

 

$

1,130,270

 
Reported operating income from continued operations 48,381 47,258 149,243 128,604
OP% 11.9 % 12.3 % 12.1 % 11.4 %
Amortization of intangible assets 11,384 12,826 34,567 37,453
Purchase accounting adjustments 71 16 101 48
Acquisition and divestiture-related costs 1,688 - 1,759 348
Significant litigation matter 633 - 5,050 -
Restructuring and contract termination charges, net   5,890     1,729     11,566     9,716  
Adjusted operating income   68,047     61,829     202,286     176,169  
Adjusted OP% 16.8 % 16.0 % 16.4 % 15.6 %
 
Diagnostics Reported revenue 268,147 168,893 788,328 485,082
Purchase accounting adjustments   187     185     562     556  
Adjusted revenue   268,334     169,078     788,890     485,638  
 
Reported operating income from continued operations 47,411 43,361 104,585 113,024
OP% 17.7 % 25.7 % 13.3 % 23.3 %
Amortization of intangible assets 23,878 4,850 66,112 14,807
Purchase accounting adjustments 3,886 851 29,517 6,400
Acquisition and divestiture-related costs 25 5,417 4,176 11,368
Significant litigation matter 365 - 193 -
Restructuring and contract termination charges, net   618     1,540     1,520     3,204  
Adjusted operating income   76,183     56,019     206,103     148,803  
Adjusted OP% 28.4 % 33.1 % 26.1 % 30.6 %
 
Corporate Reported operating loss (15,590 ) (12,581 ) (45,627 ) (39,596 )
 
Continuing Operations Reported revenue

 

$

674,313

 

$

554,275

 

$

2,021,647

 

$

1,615,352

Purchase accounting adjustments   187     185     562     556  
Adjusted revenue   674,500     554,460     2,022,209     1,615,908  
 
Reported operating income from continued operations 80,202 78,038 208,201 202,032
OP% 11.9 % 14.1 % 10.3 % 12.5 %
Amortization of intangible assets 35,262 17,676 100,679 52,260
Purchase accounting adjustments 3,957 867 29,618 6,448
Acquisition and divestiture-related costs 1,713 5,417 5,935 11,716
Significant litigation matter 998 - 5,243 -
Restructuring and contract termination charges, net   6,508     3,269     13,086     12,920  
Adjusted operating income

 

$

128,640

 

 

$

105,267

 

 

$

362,762

 

 

$

285,376

 
Adjusted OP% 19.1 % 19.0 % 17.9 % 17.7 %
 
 
REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

       

PerkinElmer, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS

 
 
 
(In thousands)

September 30, 2018

December 31, 2017

 
Current assets:
Cash and cash equivalents $ 149,513 $ 202,134
Accounts receivable, net 551,385 552,304
Inventories, net 354,244 351,675
Other current assets   110,353     93,842  
Total current assets   1,165,495     1,199,955  
 
Property, plant and equipment:
At cost 724,053 630,919
Accumulated depreciation   (407,004 )   (332,853 )
Property, plant and equipment, net 317,049 298,066
Intangible assets, net 1,223,775 1,346,940
Goodwill 2,920,689 3,002,198
Other assets, net   235,347     244,304  
Total assets $ 5,862,355   $ 6,091,463  
 
Current liabilities:
Current portion of long-term debt $ 20,072 $ 217,306
Accounts payable 180,693 222,093
Short-term accrued restructuring and contract termination charges 8,079 8,759
Accrued expenses and other current liabilities 475,743 500,642
Current liabilities of discontinued operations   2,165     2,102  
Total current liabilities   686,752     950,902  
 
Long-term debt 1,882,502 1,788,803
Long-term liabilities   720,632     848,570  
Total liabilities   3,289,886     3,588,275  
 
Total stockholders' equity   2,572,469     2,503,188  
Total liabilities and stockholders' equity $ 5,862,355   $ 6,091,463  
 
 
PREPARED IN ACCORDANCE WITH GAAP

               

PerkinElmer, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS

 
 

Three Months Ended

Nine Months Ended

September 30, 2018

October 1, 2017

September 30, 2018

October 1, 2017

(In thousands) (In thousands)
 
Operating activities:
Net income $ 76,548 $ 91,078 $ 166,635 $ 333,750
(Gain) loss from discontinued operations and dispositions, net of income taxes   (1,103 )   5,468     (482 )   (138,416 )
Income from continuing operations   75,445     96,546     166,153     195,334  
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Stock-based compensation 11,127 4,412 23,275 16,179
Restructuring and contract termination charges, net 6,508 3,269 13,086 12,920
Depreciation and amortization 45,161 26,002 133,386 75,507
Change in fair value of contingent consideration 3,739 651 10,804 1,560
Amortization of deferred debt financing costs and accretion of discounts 935 705 2,454 1,936
Gain on disposition of businesses and assets, net (13,031 ) - (13,031 ) 301
Gain on sale of investments, net (557 ) - (557 ) -
Amortization of acquired inventory revaluation - - 18,160 4,240
Changes in assets and liabilities which provided (used) cash, excluding
effects from companies acquired:
Accounts receivable, net 6,098 5,756 (12,670 ) 10,971
Inventories 1,680 (15,295 ) (41,313 ) (25,208 )
Accounts payable (12,203 ) 8,396 (36,587 ) (12,459 )
Accrued expenses and other   (31,510 )   (60,925 )   (111,341 )   (116,118 )
Net cash provided by operating activities of continuing operations 93,392 69,517 151,819 165,163
Net cash used in operating activities of discontinued operations   (200 )   (11,013 )   (200 )   (4,806 )
Net cash provided by operating activities   93,192     58,504     151,619     160,357  
 
Investing activities:
Capital expenditures (20,835 ) (10,889 ) (60,443 ) (22,362 )
Settlement of cash flow hedges - 60,420 - 60,420
Purchases of investments - - (5,500 ) -
Proceeds from surrender of life insurance policies - - 72 45
Proceeds from disposition of businesses and assets 37,854 - 38,027 -
Payment of acquisitions, net of cash and cash equivalents acquired   (9,000 )   -     (44,057 )   (123,578 )
Net cash provided (used in) by investing activities of continuing operations 8,019 49,531 (71,901 ) (85,475 )
Net cash (used in) provided by investing activities of discontinued operations   -     (4,203 )   -     272,779  
Net cash provided by (used in) investing activities   8,019     45,328     (71,901 )   187,304  
 
Financing Activities:
Payments on borrowings (352,000 ) (1,015 ) (1,019,000 ) (146,965 )
Proceeds from borrowings 263,000 - 605,000 146,952
Proceeds from sale of senior debt - - 369,340 -
Payments of debt issuance costs - - (2,634 ) -
Settlement of cash flow hedges 2,426 (7,225 ) (30,285 ) (11,539 )
Net payments on other credit facilities (12,717 ) (295 ) (22,871 ) (872 )
Payments for acquisition-related contingent consideration (12,800 ) - (12,800 ) (8,940 )
Proceeds from issuance of common stock under stock plans 11,136 781 19,484 14,004
Purchases of common stock (325 ) (215 ) (4,974 ) (3,480 )
Dividends paid   (7,751 )   (7,714 )   (23,222 )   (23,077 )
Net cash used in financing activities of continuing operations (109,031 ) (15,683 ) (121,962 ) (33,917 )
Net cash used in financing activities of discontinued operations   -     -     -     (533 )
Net cash used in financing activities (109,031 ) (15,683 ) (121,962 ) (34,450 )
 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (3,059 )   5,017     (7,410 )   19,945  
 
Net decrease in cash, cash equivalents, and restricted cash (10,879 ) 93,166 (49,654 ) 333,156
Cash, cash equivalents, and restricted cash at beginning of period   163,596     616,558     202,371     376,568  
Cash, cash equivalents, and restricted cash at end of period $ 152,717   $ 709,724   $ 152,717   $ 709,724  
 
 
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 149,513 709,488 149,513 709,488
Restricted cash included in other current assets   3,204     236     3,204     236  
Total cash, cash equivalents and restricted cash $ 152,717   $ 709,724   $ 152,717   $ 709,724  
 
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

September 30, 2018

October 1, 2017

 
Adjusted revenue:
Revenue $ 674.3 $ 554.3
Purchase accounting adjustments   0.2               0.2        
Adjusted revenue $ 674.5             $ 554.5        
 
Adjusted gross margin:
Gross margin $ 332.3 49.3 % $ 269.0 48.5 %
Amortization of intangible assets 11.6 1.7 % 7.1 1.3 %
Purchase accounting adjustments   0.2       0.0 %       0.2       0.0 %
Adjusted gross margin $ 344.1       51.0 %     $ 276.3       49.8 %
 
Adjusted SG&A:
SG&A $ 196.8 29.2 % $ 152.8 27.6 %
Amortization of intangible assets (20.0 ) -3.0 % (10.5 ) -1.9 %
Purchase accounting adjustments (3.8 ) -0.6 % (0.7 ) -0.1 %
Acquisition and divestiture-related expenses (1.7 ) -0.3 % (5.4 ) -1.0 %
Significant litigation matter   (1.0 )     -0.1 %       -       0.0 %
Adjusted SG&A $ 170.3       25.2 %     $ 136.2       24.6 %
 
Adjusted R&D:
R&D $ 48.8 7.2 % $ 34.9 6.3 %
Amortization of intangible assets   (3.7 )     -0.5 %       (0.1 )     0.0 %
Adjusted R&D $ 45.2       6.7 %     $ 34.8       6.3 %
 
Adjusted operating income:
Operating income $ 80.2 11.9 % $ 78.0 14.1 %
Amortization of intangible assets 35.3 5.2 % 17.7 3.2 %
Purchase accounting adjustments 4.0 0.6 % 0.9 0.2 %
Acquisition and divestiture-related expenses 1.7 0.3 % 5.4 1.0 %
Significant litigation matter 1.0 0.1 % - 0.0 %
Restructuring and contract termination charges, net   6.5       1.0 %       3.3       0.6 %
Adjusted operating income $ 128.6       19.1 %     $ 105.3       19.0 %
                   
PKI
Three Months Ended

September 30, 2018

October 1, 2017

 
Adjusted EPS:
GAAP EPS $ 0.69 $ 0.82
Discontinued operations, net of income taxes   0.01               (0.05 )      
GAAP EPS from continuing operations 0.68 0.87
Amortization of intangible assets 0.32 0.16
Purchase accounting adjustments 0.04 0.01
Significant litigation matter 0.01 -
Acquisition and divestiture-related expenses 0.02 (0.28 )
Gain on disposition of businesses and assets, net (0.12 ) -
Restructuring and contract termination charges, net 0.06 0.03
Tax on above items (0.03 ) (0.06 )
Impact of tax act   (0.06 )             -        
Adjusted EPS $ 0.90             $ 0.73        
                   
DAS
Three Months Ended

September 30, 2018

October 1, 2017

 
Revenue $ 406.2 $ 385.4
 
Adjusted operating income:
Operating income $ 48.4 11.9 % $ 47.3 12.3 %
Amortization of intangible assets 11.4 2.8 % 12.8 3.3 %
Purchase accounting adjustments 0.1 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses 1.7 0.4 % - 0.0 %
Significant litigation matter 0.6 0.2 % - 0.0 %
Restructuring and contract termination charges, net   5.9       1.5 %       1.7       0.4 %
Adjusted operating income $ 68.0       16.8 %     $ 61.8       16.0 %
                   
Diagnostics
Three Months Ended

September 30, 2018

October 1, 2017

 
Adjusted revenue:
Revenue $ 268.1 $ 168.9
Purchase accounting adjustments   0.2               0.2        
Adjusted revenue $ 268.3             $ 169.1        
 
Adjusted operating income:
Operating income $ 47.4 17.7 % $ 43.4 25.7 %
Amortization of intangible assets 23.9 8.9 % 4.9 2.9 %
Purchase accounting adjustments 3.9 1.4 % 0.9 0.5 %
Acquisition and divestiture-related expenses 0.0 0.0 % 5.4 3.2 %
Significant litigation matter 0.4 0.1 % - 0.0 %
Restructuring and contract termination charges, net   0.6       0.2 %       1.5       0.9 %
Adjusted operating income $ 76.2       28.4 %     $ 56.0       33.1 %
 
 
(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

September 30, 2018

October 1, 2017

 
Adjusted revenue:
Revenue $ 2,021.6 $ 1,615.4
Purchase accounting adjustments   0.6               0.6        
Adjusted revenue $ 2,022.2             $ 1,615.9        
 
Adjusted gross margin:
Gross margin $ 964.7 47.7 % $ 766.3 47.4 %
Amortization of intangible assets 34.8 1.7 % 21.3 1.3 %
Purchase accounting adjustments   18.8       0.9 %       4.8       0.3 %
Adjusted gross margin $ 1,018.3       50.4 %     $ 792.5       49.0 %
 
Adjusted SG&A:
SG&A $ 601.4 29.7 % $ 449.6 27.8 %
Amortization of intangible assets (62.0 ) -3.1 % (30.7 ) -1.9 %
Purchase accounting adjustments (10.9 ) -0.5 % (1.6 ) -0.1 %
Acquisition and divestiture-related expenses (5.9 ) -0.3 % (11.7 ) -0.7 %
Significant litigation matter   (5.2 )     -0.3 %       -       0.0 %
Adjusted SG&A $ 517.3       25.6 %     $ 405.6       25.1 %
 
Adjusted R&D:
R&D $ 142.0 7.0 % $ 101.7 6.3 %
Amortization of intangible assets   (3.8 )     -0.2 %       (0.2 )     0.0 %
Adjusted R&D $ 138.2       6.8 %     $ 101.5       6.3 %
 
Adjusted operating income:
Operating income $ 208.2 10.3 % $ 202.0 12.5 %
Amortization of intangible assets 100.7 5.0 % 52.3 3.2 %
Purchase accounting adjustments 29.6 1.5 % 6.4 0.4 %
Acquisition and divestiture-related expenses 5.9 0.3 % 11.7 0.7 %
Significant litigation matter 5.2 0.3 % - 0.0 %
Restructuring and contract termination charges, net   13.1       0.6 %       12.9       0.8 %
Adjusted operating income $ 362.8       17.9 %     $ 285.4       17.7 %
 
PKI
Nine Months Ended
September 30, 2018 October 1, 2017
 
Adjusted EPS:
GAAP EPS $ 1.49 $ 3.02
Discontinued operations   0.00               1.25        
GAAP EPS from continuing operations 1.49 1.77
Amortization of intangible assets 0.90 0.47
Purchase accounting adjustments 0.27 0.06
Significant litigation matter 0.05 -
Acquisition and divestiture-related expenses 0.05 (0.27 )
Gain on disposition of businesses and assets, net (0.12 ) 0.00
Mark to market on postretirement benefits - (0.00 )
Restructuring and contract termination charges, net 0.12 0.12
Tax on above items (0.27 ) (0.20 )
Impact of tax act   (0.05 )             -        
Adjusted EPS $ 2.43             $ 1.94        
                   
PKI
Twelve Months Ended
December 30, 2018
Adjusted EPS: Projected
GAAP EPS from continuing operations $ 2.37
Amortization of intangible assets 1.21
Purchase accounting adjustments 0.31
Significant litigation matter 0.05
Acquisition and divestiture-related expenses 0.06
Disposition of businesses and assets, net (0.12 )
Restructuring and contract termination charges, net 0.12
Tax on above items (0.35 )
Impact of tax act               (0.05 )      
Adjusted EPS             $ 3.60        
                   
DAS
Nine Months Ended

September 30, 2018

October 1, 2017

 
Revenue $ 1,233.3 $ 1,130.3
 
Adjusted operating income:
Operating income $ 149.2 12.1 % $ 128.6 11.4 %
Amortization of intangible assets 34.6 2.8 % 37.5 3.3 %
Purchase accounting adjustments 0.1 0.0 % 0.0 0.0 %
Acquisition and divestiture-related expenses 1.8 0.1 % 0.3 0.0 %
Significant litigation matter 5.1 0.4 % - 0.0 %
Restructuring and contract termination charges, net   11.6       0.9 %       9.7       0.9 %
Adjusted operating income $ 202.3       16.4 %     $ 176.2       15.6 %
                   
Diagnostics
Nine Months Ended
September 30, 2018 October 1, 2017
 
Adjusted revenue:
Revenue $ 788.3 $ 485.1
Purchase accounting adjustments   0.6               0.6        
Adjusted revenue $ 788.9             $ 485.6        
 
Adjusted operating income:
Operating income $ 104.6 13.3 % $ 113.0 23.3 %
Amortization of intangible assets 66.1 8.4 % 14.8 3.1 %
Purchase accounting adjustments 29.5 3.7 % 6.4 1.3 %
Acquisition and divestiture-related expenses 4.2 0.5 % 11.4 2.3 %
Significant litigation matter 0.2 0.0 % - 0.0 %
Restructuring and contract termination charges, net   1.5       0.2 %       3.2       0.7 %
Adjusted operating income $ 206.1       26.1 %     $ 148.8       30.6 %
 
 
(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

September 30, 2018

Organic revenue growth:
Reported revenue growth 22%
Less: effect of foreign exchange rates -2%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 16%
Organic revenue growth 7%
Less: effect of Euroimmun 0%
Core organic revenue growth 7%
 
 

 

DAS

Three Months Ended

September 30, 2018

Organic revenue growth:
Reported revenue growth 5%
Less: effect of foreign exchange rates -1%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 0%
Organic revenue growth 7%
 
 

 

Diagnostics

Three Months Ended

September 30, 2018

Organic revenue growth:
Reported revenue growth 59%
Less: effect of foreign exchange rates -2%
Less: effect of acquisitions including purchase accounting adjustments and impact of divested businesses 53%
Organic revenue growth 8%
Less: effect of Euroimmun 1%
Core organic revenue growth 7%
 
(1) amounts may not sum due to rounding

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash, non-recurring or other items, which result from facts and circumstances that vary in frequency and impact on continuing operations. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management's ability to make useful forecasts. Management believes these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

We use the term “adjusted revenue” to refer to GAAP revenue, including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We use the related term “adjusted revenue growth” to refer to the measure of comparing current period adjusted revenue with the corresponding period of the prior year.

We use the term “organic revenue” to refer to GAAP revenue, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. We use the related term “organic revenue growth” to refer to the measure of comparing current period organic revenue with the corresponding period of the prior year.

We use the term “core organic revenue” to refer to GAAP revenue excluding Euroimmun, excluding the effect of foreign currency changes and including acquisitions growth from the comparable prior period, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules. We also exclude the impact of sales from divested businesses by deducting the effects of divested business revenue from the current and prior periods. We use the related term “core organic revenue growth” to refer to the measure of comparing current period core organic revenue with the corresponding period of the prior year.

We use the term “adjusted gross margin” to refer to GAAP gross margin, excluding amortization of intangible assets and inventory fair value adjustments related to business acquisitions, and including purchase accounting adjustments for revenue from contracts acquired in acquisitions that will not be fully recognized due to business combination accounting rules. We use the related term “adjusted gross margin percentage” to refer to adjusted gross margin as a percentage of adjusted revenue.

We use the term “adjusted SG&A expense” to refer to GAAP SG&A expense, excluding amortization of intangible assets, purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters and significant environmental charges. We use the related term “adjusted SG&A percentage” to refer to adjusted SG&A expense as a percentage of adjusted revenue.

We use the term “adjusted R&D expense” to refer to GAAP R&D expense, excluding amortization of intangible assets. We use the related term “adjusted R&D percentage” to refer to adjusted R&D expense as a percentage of adjusted revenue.

We use the term “adjusted operating income,” to refer to GAAP operating income, including revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules, and excluding amortization of intangible assets, other purchase accounting adjustments, acquisition and divestiture-related expenses, significant litigation matters, significant environmental charges, and restructuring and contract termination charges. We use the related terms “adjusted operating profit percentage,” “adjusted operating profit margin,” or “adjusted operating margin” to refer to adjusted operating income as a percentage of adjusted revenue.

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

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

  • Amortization of intangible assets— purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.
  • Revenue from contracts acquired in acquisitions that will not be fully recognized due to accounting rules—accounting rules require us to account for the fair value of revenue from contracts assumed in connection with our acquisitions. As a result, our GAAP results reflect the fair value of those revenues, which is not the same as the revenue that otherwise would have been recorded by the acquired entity. We include such revenue in our non-GAAP measures because we believe the fair value of such revenue does not accurately reflect the performance of our ongoing operations for the period in which such revenue is recorded.
  • Other purchase accounting adjustments—accounting rules require us to adjust various balance sheet accounts, including inventory and deferred rent balances to fair value at the time of the acquisition. As a result, the expenses for these items in our GAAP results are not the same as what would have been recorded by the acquired entity. Accounting rules also require us to estimate the fair value of contingent consideration at the time of the acquisition, and any subsequent changes to the estimate or payment of the contingent consideration and purchase accounting adjustments are charged to expense or income. We exclude the impact of any changes to contingent consideration from our non-GAAP measures because we believe these expenses or benefits do not accurately reflect the performance of our ongoing operations for the period in which such expenses or benefits are recorded.
  • Acquisition and divestiture-related expenses—we incur legal, due diligence, stay bonuses, interest expense, foreign exchange gains and losses, significant acquisition integration expenses and other costs related to acquisitions and divestitures. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
  • Restructuring and contract termination charges—restructuring and contract termination expenses consist of employee severance and other exit costs as well as the cost of terminating certain lease agreements or contracts. Management does not believe such costs accurately reflect the performance of our ongoing operations for the period in which such costs are reported.
  • Adjustments for mark-to-market accounting on post-retirement benefits—we exclude adjustments for mark-to-market accounting on post-retirement benefits, and therefore only our projected costs are used to calculate our non-GAAP measures. We exclude these adjustments because they do not represent what we believe our investors consider to be costs of producing our products, investments in technology and production, and costs to support our internal operating structure.
  • Significant litigation matters—we incur expenses related to significant litigation matters. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Significant environmental charges—we incur expenses related to significant environmental charges. Management does not believe such charges accurately reflect the performance of our ongoing operations for the periods in which such charges were incurred.
  • Disposition of businesses and assets, net—we exclude the impact of gains or losses from the disposition of businesses and assets from our adjusted earnings per share. Management does not believe such gains or losses accurately reflect the performance of our ongoing operations for the period in which such gains or losses are reported.
  • Impact of foreign currency changes on the current period—we exclude the impact of foreign currency from these measures by using the prior period’s foreign currency exchange rates for the current period because foreign currency exchange rates are subject to volatility and can obscure underlying trends.

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.