- GAAP Revenue of $548 million versus
$563 million in the comparable prior period
- GAAP earnings per share from
continuing operations of $0.52; Adjusted earnings per share of
$0.68
- GAAP operating profit margin of
14.8%; Adjusted operating profit margin of 18.9%
- GAAP gross margin expands 240 basis
points; Adjusted gross margin expands 170 basis points
PerkinElmer, Inc. (NYSE: PKI), a global leader committed to
innovating for a healthier world, today reported financial results
for the third quarter ended October 2, 2016.
The Company reported GAAP earnings per share from continuing
operations of $0.52, as compared to $0.48 in the third quarter of
2015. GAAP revenue in the third quarter of 2016 was $548.1 million,
as compared to $563.4 million in the comparable period of 2015.
GAAP operating income from continuing operations for the third
quarter of 2016 was $81.2 million, as compared to $75.9 million in
the third quarter of 2015. Operating profit margin was 14.8% as a
percentage of revenue, as compared to 13.5% for the same period a
year ago.
Adjusted earnings per share was $0.68, as compared to $0.60 in
the third quarter of 2015. Adjusted revenue for the quarter was
$548.2 million, as compared to $563.6 million in the third quarter
of 2015. Adjusted operating income for the third quarter of 2016
was $103.9 million, as compared to $95.7 million for the same
period a year ago. Adjusted operating profit margin was 18.9% as a
percentage of adjusted revenue, as compared to 17.0% for the same
period a year ago. Adjustments for the Company's non-GAAP financial
measures have been noted in the attached reconciliations.
“During the third quarter we continued to drive solid
operational improvements across the Company resulting in strong
margin expansion and EPS growth, however our top line performance
was disappointing as our capital intensive businesses experienced
challenging market conditions,” said Robert Friel, chairman and
chief executive officer of PerkinElmer. “We believe the strong
profit performance this quarter and year-to-date validates the
steps we are taking to rebalance the portfolio and the recent
realignment of our operating segments into Diagnostics and
Discovery & Analytical Solutions will help us accelerate that
transition.”
Cash Flow
For the first nine months of 2016, GAAP operating cash flow from
continuing operations was $198.9 million, as compared to $161.9
million in the comparable period of 2015.
Financial Overview by Reporting Segment for the Third Quarter
of 2016
Human Health
- Revenue of $338.2 million, as compared
to $343.6 million for the third quarter of 2015 representing
revenue decline of 2%. Organic revenue growth was flat, impacted by
the extra week in the comparable prior period.
- Operating income of $64.6 million, as
compared to operating income of $63.1 million for the same period a
year ago.
Environmental Health
- Revenue of $209.8 million, as compared
to $219.8 million for the third quarter of 2015 representing
revenue decline of 5%. Organic revenue declined 5% due to softer
capital equipment end markets.
- Operating income of $27.7 million, as
compared to operating income of $22.8 million for the same period a
year ago.
Updated Financial Guidance – Full Year 2016
For the full year 2016, the Company is narrowing its previous
guidance of GAAP earnings per share from continuing operations to a
new range of $2.24 to $2.26 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 $2.77.
Conference Call Information
The Company will discuss its third quarter results and its
outlook for business trends in a conference call on November 7,
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 85694495.
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 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) the approval of the Brexit Referendum in
the United Kingdom; (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 committed to innovating for
a healthier world. 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 CONDENSED CONSOLIDATED INCOME
STATEMENTS
Three Months
Ended
Nine Months
Ended
(In thousands, except per share data)
October 2,
2016
October 4,
2015
October 2,
2016
October 4,
2015
Revenue $ 548,054 $ 563,436 $ 1,659,405 $
1,654,243 Cost of revenue 287,255 308,833 $ 883,226 $
911,754 Selling, general and administrative expenses 145,793
147,728 447,332 440,343 Research and development expenses 33,175
31,095 101,967 95,898 Restructuring and contract termination
charges, net
603
(118 ) 5,692
4,838 Operating income from
continuing operations 81,228 75,898 221,188 201,410
Interest income (124 ) (147 ) (361 ) (488 ) Interest expense 10,998
9,874 30,778 28,564 Gain on disposition of businesses and assets,
net - - (5,562 ) - Other expense, net
389
2,217 2,887
4,132 Income from
continuing operations, before income taxes 69,965 63,954 193,446
169,202 Provision for income taxes
12,216 9,057
26,970 24,998
Income from continuing operations 57,749 54,897 166,476
144,204 Gain from discontinued operations, before income
taxes - 8 - 6 Gain (loss) on disposition of discontinued
operations, before income taxes 630 (3 ) 619 (26 ) Provision for
(benefit from) income taxes on discontinued operations and
dispositions
252 39
(2,355 )
13 Gain (loss) from discontinued
operations and dispositions 378
(34 ) 2,974
(33 ) Net
income $ 58,127 $
54,863 $ 169,450
$ 144,171
Diluted earnings per share: Income from continuing
operations $ 0.52 $ 0.48 $ 1.51 $ 1.27 Gain (loss) from
discontinued operations and dispositions
0.00
(0.00 )
0.03 (0.00 )
Net income
$ 0.53
$ 0.48 $
1.54 $ 1.27
Weighted average diluted shares of common stock
outstanding 110,078 113,422 110,372 113,565 ABOVE PREPARED
IN ACCORDANCE WITH GAAP
Additional Supplemental
Information (1): (per share, continuing
operations) GAAP EPS from continuing operations $ 0.52 $
0.48 $ 1.51 $ 1.27 Amortization of intangible assets 0.16 0.17 0.50
0.52 Purchase accounting adjustments 0.04 0.01 0.10 0.07
Acquisition and divestiture-related
expenses
0.00 0.00 0.01 0.00 Disposition of businesses - - (0.05 ) - Mark to
market on postretirement benefits - - (0.00 ) 0.01 Restructuring
and contract termination charges 0.01 (0.00 ) 0.05 0.04 Tax on
above items
(0.05 )
(0.06 ) (0.22
) (0.22 ) Adjusted
EPS $ 0.68
$ 0.60
$ 1.90
$ 1.70 (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 2,
2016
October 4,
2015
October 2,
2016
October 4,
2015
Human Health Reported revenue $ 338,241 $
343,636 $ 1,024,160 $ 1,011,177 Purchase accounting adjustments 176
164 527 628 Adjusted Revenue 338,417
343,800 1,024,687 1,011,805
Reported operating income from continued operations 64,562 63,147
176,881 179,560 OP% 19.1 % 18.4 % 17.3 % 17.8 % Amortization of
intangible assets 13,699 15,298 41,145 46,041 Purchase accounting
adjustments 4,258 195 10,295 720 Acquisition and
divestiture-related expenses 447 74 872 283 Restructuring and
contract termination charges, net 393 184 4,704
2,004 Adjusted operating income 83,359 78,898
233,897 228,608 Adjusted OP% 24.6 % 22.9 %
22.8 % 22.6 %
Environmental Health Reported revenue
209,813 219,800 635,245 643,066 Purchase accounting adjustments -
- - - Adjusted Revenue 209,813
219,800 635,245 643,066 Reported
operating income from continued operations 27,662 22,838 78,855
53,606 OP% 13.2 % 10.4 % 12.4 % 8.3 % Amortization of intangible
assets 3,641 3,551 14,127 12,499 Purchase accounting adjustments -
808 398 7,275 Acquisition and divestiture-related expenses - 19 102
235 Restructuring and contract termination charges, net 210
(302 ) 988 2,834 Adjusted operating income 31,513
26,914 94,470 76,449 Adjusted OP% 15.0
% 12.2 % 14.9 % 11.9 %
Corporate
Reported operating (loss)
(10,996 ) (10,087 ) (34,548 ) (31,756 ) Mark to market on
postretirement benefits - - (3 ) 1,066
Adjusted operating loss (10,996 ) (10,087 ) (34,551 ) (30,690 )
Continuing Operations Reported revenue $
548,054 $ 563,436 $ 1,659,405 $ 1,654,243 Purchase accounting
adjustments 176 164 527 628 Adjusted
Revenue 548,230 563,600 1,659,932 1,654,871
Reported operating income from continued operations
81,228 75,898 221,188 201,410 OP% 14.8 % 13.5 % 13.3 % 12.2 %
Amortization of intangible assets 17,340 18,849 55,272 58,540
Purchase accounting adjustments 4,258 1,003 10,693 7,995
Acquisition and divestiture-related expenses 447 93 974 518 Mark to
market on postretirement benefits - - (3 ) 1,066 Restructuring and
contract termination charges, net 603 (118 ) 5,692
4,838 Adjusted operating income $ 103,876 $ 95,725
$ 293,816 $ 274,367 Adjusted OP% 18.9 % 17.0 %
17.7 % 16.6 % REPORTED REVENUE AND REPORTED OPERATING INCOME
(LOSS) PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands) October 2,
2016 January 3, 2016 Current
assets: Cash and cash equivalents $ 311,663 $ 237,932 Accounts
receivable, net 443,275 439,015 Inventories, net 306,041 288,028
Other current assets 92,587 68,186
Total current assets 1,153,566 1,033,161
Property, plant and equipment: At cost 525,396
494,956 Accumulated depreciation (350,170 ) (327,927
) Property, plant and equipment, net 175,226 167,029 Marketable
securities and investments 1,539 1,586 Intangible assets, net
452,458 490,811 Goodwill 2,313,900 2,276,149 Other assets, net
207,867 197,559 Total assets $
4,304,556 $ 4,166,295 Current liabilities:
Current portion of long-term debt $ 1,160 $ 1,123 Accounts payable
162,321 152,726 Short-term accrued restructuring and contract
termination charges 9,133 17,090 Accrued expenses and other current
liabilities 373,207 388,446 Current liabilities of discontinued
operations 2,170 2,100 Total current
liabilities 547,991 561,485
Long-term debt 1,131,925 1,011,762 Long-term liabilities
489,218 482,607 Total liabilities
2,169,134 2,055,854 Total stockholders'
equity 2,135,422 2,110,441 Total
liabilities and stockholders' equity $ 4,304,556 $ 4,166,295
PREPARED IN ACCORDANCE WITH GAAP
PerkinElmer, Inc. and Subsidiaries CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three Months
Ended
Nine Months
Ended
October 2,
2016
October 4,
2015
October 2,
2016
October 4,
2015
(In thousands) Operating activities: Net
income $ 58,127 $ 54,863 $ 169,450 $ 144,171 (Gain on) loss from
discontinued operations, net of income taxes (378 )
34 (2,974 ) 33 Income from
continuing operations 57,749 54,897
166,476 144,204 Adjustments to
reconcile income from continuing operations to net cash provided by
continuing operations: Restructuring and contract termination
charges, net 603 (118 ) 5,692 4,838 Depreciation and amortization
25,891 27,164 79,287 83,757 Stock-based compensation 3,908 4,290
13,819 12,483 Change in fair value of contingent consideration
4,051 - 9,678 - Amortization of deferred debt financing costs and
accretion of discounts 756 435 1,507 1,112 Gain on disposition of
businesses and assets, net - - (5,562 ) - Amortization of acquired
inventory revaluation - 808 396 7,275 Changes in assets and
liabilities which provided (used) cash, excluding effects from
companies purchased and divested: Accounts receivable, net (4,385 )
5,518 1,848 36,361 Inventories (5,711 ) (17,497 ) (12,350 ) (50,824
) Accounts payable 5,955 (18,375 ) 8,986 (19,916 ) Accrued expenses
and other (15,580 ) 3,646
(70,859 ) (57,361 )
Net cash provided by operating
activities of continuing operations 73,237 60,768
198,918 161,929 Net cash provided by (used in)
operating activities of discontinued operations 378
(43 ) 2,974 (70 )
Net cash
provided by operating activities 73,615
60,725 201,892
161,859 Investing activities:
Capital expenditures (8,991 ) (7,715 ) (25,311 ) (17,814 ) Proceeds
from surrender of life insurance policies - 757 44 757 Changes in
restricted cash balances - - (2,000 ) 59 Proceeds from disposition
of businesses - - 21,000 - Activity related to acquisitions and
investments, net of cash and cash equivalents acquired
(61,440 ) - (71,924 ) (18,735 )
Net cash used in investing activities (70,431
) (6,958 ) (78,191
) (35,733 ) Financing
Activities: Payments on revolving credit facility (609,507 )
(122,000 ) (804,507 ) (371,000 ) Proceeds from revolving credit
facility 135,507 163,000 375,507 347,000 Proceeds from sale of
senior debt 546,190 - 546,190 - Payments of debt issuance costs
(7,868 ) - (7,868 ) - Settlement of cash flow hedges 396 (4,258 )
1,674 19,210 Net payments on other credit facilities (282 ) (1,144
) (835 ) (800 ) Payments for acquisition-related contingent
consideration (14 ) (26 ) (113 ) (26 ) Proceeds from issuance of
common stock under stock plans 3,128 412 12,081 13,081 Purchases of
common stock (96 ) (72,063 ) (151,640 ) (76,158 ) Dividends paid
(7,658 ) (7,938 ) (23,131 )
(23,737 )
Net cash provided by (used in) financing
activities 59,796 (44,017
) (52,642 )
(92,430 ) Effect of exchange rate changes on
cash and cash equivalents 600 (6,854 )
2,672 (13,451 )
Net increase in cash
and cash equivalents 63,580 2,896 73,731
20,245 Cash and cash equivalents at beginning of period
248,083 192,170 237,932
174,821
Cash and cash equivalents at end of
period $ 311,663 $ 195,066
$ 311,663 $
195,066 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 2,
2016
October 4,
2015
Adjusted revenue: Revenue $ 548.1 $ 563.4 Purchase
accounting adjustments 0.2
0.2
Adjusted revenue $ 548.2
$ 563.6
Adjusted gross
margin: Gross margin $ 260.8 47.6 % $ 254.6 45.2 % Amortization
of intangible assets 7.3 1.3 % 10.7 1.9 % Purchase accounting
adjustments 0.2 0.0 %
1.0 0.2 % Adjusted gross margin
$ 268.3 48.9 % $ 266.3
47.2 %
Adjusted SG&A:
SG&A $ 145.8 26.6 % $ 147.7 26.2 % Amortization of intangible
assets (10.0 ) -1.8 % (8.0 ) -1.4 % Purchase accounting adjustments
(4.1 ) -0.7 % (0.0 ) 0.0 % Acquisition and divestiture related
expenses (0.4 ) -0.1 %
(0.1 ) 0.0 % Adjusted SG&A $ 131.3
23.9 % $ 139.6
24.8 %
Adjusted R&D: R&D $ 33.2 6.1 %
$ 31.1 5.5 % Amortization of intangible assets (0.1 )
0.0 % (0.1 ) 0.0 %
Adjusted R&D $ 33.1 6.0 %
$ 31.0 5.5 %
Adjusted
operating income: Operating income $ 81.2 14.8 % $ 75.9 13.5 %
Amortization of intangible assets 17.3 3.2 % 18.8 3.3 % Purchase
accounting adjustments 4.3 0.8 % 1.0 0.2 % Acquisition and
divestiture-related expenses 0.4 0.1 % 0.1 0.0 % Restructuring and
contract termination charges, net 0.6
0.1 % (0.1 ) 0.0 %
Adjusted operating income $ 103.9 18.9 %
$ 95.7 17.0 %
PKI
Three Months Ended
October 2,
2016
October 4,
2015
Adjusted EPS: GAAP EPS $ 0.53 $ 0.48 Discontinued
operations, net of income taxes 0.00
(0.00 )
GAAP EPS from continuing operations 0.52 0.48 Amortization of
intangible assets 0.16 0.17 Purchase accounting adjustments 0.04
0.01 Acquisition and divestiture-related expenses 0.00 0.00
Restructuring and contract termination charges 0.01 (0.00 ) Tax on
above items (0.05 )
(0.06 ) Adjusted EPS $ 0.68
$ 0.60
Human Health
Three Months Ended
October 2,
2016
October 4,
2015
Adjusted revenue: Revenue $ 338.2 $ 343.6 Purchase
accounting adjustments 0.2
0.2
Adjusted revenue $ 338.4
$ 343.8
Adjusted
operating income: Operating income $ 64.6 19.1 % $ 63.1 18.4 %
Amortization of intangible assets 13.7 4.1 % 15.3 4.5 % Purchase
accounting adjustments 4.3 1.3 % 0.2 0.1 % Acquisition and
divestiture-related expenses 0.4 0.1 % 0.1 0.0 % Restructuring and
contract termination charges, net 0.4
0.1 % 0.2 0.1 %
Adjusted operating income $ 83.4 24.6 %
$ 78.9 22.9 %
Environmental Health
Three Months Ended
October 2,
2016
October 4,
2015
Revenue: Revenue $ 209.8 $ 219.8
Adjusted
operating income: Operating income $ 27.7 13.2 % $ 22.8 10.4 %
Amortization of intangible assets 3.6 1.7 % 3.6 1.6 % Purchase
accounting adjustments - 0.0 % 0.8 0.4 % Acquisition and
divestiture-related expenses - 0.0 % 0.0 0.0 % Restructuring and
contract termination charges, net 0.2
0.1 % (0.3 ) -0.1 %
Adjusted operating income $ 31.5 15.0 %
$ 26.9 12.2 %
(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 2,
2016
October 4,
2015
Adjusted revenue: Revenue $ 1,659.4 $ 1,654.2
Purchase accounting adjustments 0.5
0.6
Adjusted revenue $ 1,659.9
$ 1,654.9
Adjusted gross margin: Gross margin $ 776.2 46.8 % $ 742.5
44.9 % Amortization of intangible assets 24.1 1.5 % 32.2 1.9 %
Purchase accounting adjustments 1.0 0.1 % 7.9 0.5 % Mark to market
on postretirement benefits (0.0 ) 0.0 %
0.2 0.0 % Adjusted gross
margin $ 801.3 48.3 % $
782.9 47.3 %
Adjusted SG&A:
SG&A $ 447.3 27.0 % $ 440.3 26.6 % Amortization of intangible
assets (30.7 ) -1.8 % (26.0 ) -1.6 % Purchase accounting
adjustments (9.7 ) -0.6 % (0.0 ) 0.0 % Acquisition and
divestiture-related expenses (1.0 ) -0.1 % (0.5 ) 0.0 % Mark to
market on postretirement benefits - 0.0
% (0.8 ) -0.1 % Adjusted
SG&A $ 405.9 24.5 % $
413.0 25.0 %
Adjusted R&D:
R&D $ 102.0 6.1 % $ 95.9 5.8 % Amortization of intangible
assets (0.5 ) 0.0 %
(0.4 ) 0.0 % Adjusted R&D $ 101.5
6.1 % $ 95.5
5.8 %
Adjusted operating income: Operating
income $ 221.2 13.3 % $ 201.4 12.2 % Amortization of intangible
assets 55.3 3.3 % 58.5 3.5 % Purchase accounting adjustments 10.7
0.6 % 8.0 0.5 % Acquisition and divestiture-related expenses 1.0
0.1 % 0.5 0.0 % Mark to market on postretirement benefits (0.0 )
0.0 % 1.1 0.1 % Restructuring and contract termination charges, net
5.7 0.3 %
4.8 0.3 % Adjusted operating income $ 293.8
17.7 % $ 274.4
16.6 %
PKI
Nine Months Ended
October 2,
2016
October 4,
2015
Adjusted EPS: GAAP EPS $ 1.54 $ 1.27 Discontinued
operations 0.03
(0.00 ) GAAP EPS from continuing
operations 1.51 1.27 Amortization of intangible assets 0.50 0.52
Purchase accounting adjustments 0.10 0.07 Acquisition and
divestiture-related expenses 0.01 0.00 Gain on disposition of
businesses and assets, net (0.05 ) - Mark to market on
postretirement benefits (0.00 ) 0.01 Restructuring and contract
termination charges 0.05 0.04 Tax on above items (0.22 )
(0.22 )
Adjusted EPS $ 1.90
$ 1.70
PKI
Twelve Months Ended
January 1,
2017
Adjusted EPS: Projected GAAP EPS from continuing
operations $2.24 - $2.26 Amortization of intangible assets 0.67
Purchase accounting adjustments 0.10 Gain on disposition of
businesses and assets, net (0.05 ) Mark to market on postretirement
benefits (0.00 ) Acquisition and divestiture-related expenses 0.01
Restructuring and contract termination charges 0.05 Tax on above
items (0.27
) Adjusted EPS
$2.75 - $2.77
Human Health
Nine Months Ended
October 2,
2016
October 4,
2015
Adjusted revenue: Revenue $ 1,024.2 $ 1,011.2
Purchase accounting adjustments 0.5
0.6
Adjusted revenue $ 1,024.7
$ 1,011.8
Adjusted operating income: Operating income $ 176.9 17.3 % $
179.6 17.8 % Amortization of intangible assets 41.1 4.0 % 46.0 4.6
% Purchase accounting adjustments 10.3 1.0 % 0.7 0.1 % Acquisition
and divestiture-related expenses 0.9 0.1 % 0.3 0.0 % Restructuring
and contract termination charges, net 4.7
0.5 % 2.0
0.2 % Adjusted operating income $ 233.9 22.8 %
$ 228.6 22.6 %
Environmental Health
Nine Months Ended
October 2,
2016
October 4,
2015
Revenue: Revenue $ 635.2 $ 643.1
Adjusted
operating income: Operating income $ 78.9 12.4 % $ 53.6 8.3 %
Amortization of intangible assets 14.1 2.2 % 12.5 1.9 % Purchase
accounting adjustments 0.4 0.1 % 7.3 1.1 % Acquisition and
divestiture-related expenses 0.1 0.0 % 0.2 0.0 % Restructuring and
contract termination charges, net 1.0
0.2 % 2.8 0.4 %
Adjusted operating income $ 94.5 14.9 %
$ 76.4 11.9 %
(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 2,
2016
Organic revenue growth: Reported revenue growth -3% Less:
effect of foreign exchange rates 0% Less: effect of acquisitions
including purchase accounting adjustments and impact of divested
businesses -1% Organic revenue growth -2%
Human Health Three Months Ended
October 2,
2016
Organic revenue growth: Reported revenue growth -2% Less:
effect of foreign exchange rates 0% Less: effect of acquisitions
including purchase accounting adjustments and impact of divested
businesses -2% Organic revenue growth 0%
Environmental Health Three Months Ended
October 2,
2016
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 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 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, gain on 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,
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, therefore only our projected costs have
been 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 incurred 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 incurred 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.
- Gain on
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, gain on
disposition of businesses and assets, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161107006458/en/
PerkinElmer, Inc.Investor Relations:Tommy J. Thomas, CPA,
781-663-5889tommy.thomas@perkinelmer.comorMedia Contact:Fara
Goldberg, 781-663-5699fara.goldberg@perkinelmer.com
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