2016-02-14

PerkinElmer Announces Financial Results for Fourth Quarter and Full Year 2015

Fourth quarter 2015 GAAP revenue of $608.1 million; Constant currency adjusted revenue growth of 5%; Organic revenue growth of 3%

Fourth quarter 2015 GAAP earnings per share from continuing operations of $0.61; Adjusted earnings per share of $0.86 representing 11% constant currency adjusted earnings per share growth

Strong fourth quarter 2015 operating cash flow from continuing operations of $125.7 million, up 30%

Full year 2015 GAAP revenues of $2.26 billion; Constant currency adjusted revenue growth of 7%; Organic revenue growth of 4%

Full year GAAP earnings per share from continuing operations of $1.88; Adjusted earnings per share of $2.55 representing full year constant currency adjusted earnings per share growth of 13%

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 fourth quarter and full year ended January 3, 2016.

Fourth Quarter 2015

The Company reported GAAP earnings per share from continuing operations of $0.61 versus $0.28 in the comparable prior period of 2014. Revenue was $608.1 million versus $608.4 million in the comparable prior period of 2014. GAAP operating income from continuing operations was $84.7 million versus $30.6 million in the comparable prior period of 2014.

Adjusted earnings per share of $0.86, representing constant currency adjusted earnings per share growth of 11%, as compared to $0.85 in the comparable prior period in 2014. Adjusted earnings per share was negatively impacted by $0.08 of foreign currency headwinds versus the comparable prior period representing an incremental $0.02 per share versus prior guidance. Adjusted revenue was $608.3 million versus$608.6 million in the comparable prior period of 2014 negatively impacted by foreign currency headwinds of $32 million, $5 million more than expected in our prior guidance. Adjusted operating income was $126.0 million negatively impacted by approximately $11 million of foreign currency headwinds versus $130.6 million in the comparable prior period of 2014.

Full Year 2015

The Company reported GAAP earnings per share from continuing operations of $1.88, compared to $1.42 in 2014. GAAP operating income from continuing operations was $286.1 million as compared to $210.7 million in 2014.

Adjusted earnings per share of $2.55, representing 13% constant currency adjusted earnings per share growth, as compared to $2.47 in 2014. Negative foreign exchange rates impacted full year adjusted earnings per share by approximately $0.25 as compared to 2014. Adjusted revenue was $2.26 billion, representing 7% constant currency adjusted revenue growth as compared to $2.24 billion in 2014, negatively impacted by approximately $142 million of foreign currency headwinds. Adjusted operating income was $400.4 million, as compared to $394.6 million in 2014.

Adjustments for the Company’s non-GAAP financial measures have been noted in the attached reconciliations. Certain of these non-GAAP financial measures are presented on a ‘constant currency’ basis, so that financial results can be viewed without the effects of fluctuations in foreign currency exchange rates, allowing for a period-to-period comparison of underlying business performance.

“I am very pleased with our financial results for the year, as we delivered strong performance for our shareholders while supporting our customers with award winning innovations and differentiated solutions for their unique needs,” said Robert Friel, chairman and chief executive officer of PerkinElmer. “We are well positioned heading into 2016 and will look to build on our core strengths while offering world class products and services for our customers.”

Cash Flow

For the fourth quarter of 2015, operating cash flow from continuing operations was $125.7 million, a strong 30% increase as compared to $96.6 million in the comparable prior period of 2014. For the full year, operating cash flow from continuing operations was $287.6 million which includes $20.0 million in voluntary pension payments as compared to $282.3 million in 2014.

Financial Overview by Reporting Segment for the Fourth Quarter and Full Year of 2015

Human Health

Fourth quarter 2015 revenue of $365.5 million, as compared to $374.7 million for the fourth quarter of 2014. Fourth quarter 2015 revenue declined 2% and organic revenue increased 2%. Full year 2015 revenue of $1,376.6 million, as compared to $1,384.2 million in 2014. Full year 2015 revenue declined 1% and organic revenue increased 4%.

Fourth quarter 2015 operating income of $72.2 million, as compared to $83.7 million for the fourth quarter of 2014. Full year 2015 operating income of $251.7 million, as compared to operating income of$233.7 million for 2014.

Fourth quarter 2015 adjusted operating income of $91.3 million, as compared to $101.4 million in the fourth quarter of 2014. Fourth quarter 2015 adjusted operating profit margin was 25.0% as a percentage of adjusted revenue, as compared to 27.0% in the fourth quarter of 2014. Full year 2015 adjusted operating income of $319.9 million, as compared to adjusted operating income of $315.3 million for 2014. Full year 2015 adjusted operating profit margin was 23.2% as a percentage of adjusted revenue, as compared to 22.7% in 2014.

Environmental Health

Fourth quarter 2015 revenue of $242.6 million, as compared to $233.7 million for the fourth quarter of 2014. Fourth quarter 2015 revenue increased 4% and organic revenue increased 5%. Full year 2015 revenue of $885.7 million, as compared to $853.0 million in 2014.

Fourth quarter 2015 operating income of $35.9 million, as compared to operating income of $29.9 million for the fourth quarter of 2014. Full year 2015 operating income of $89.5 million, as compared to operating income of $95.6 million for 2014.

Fourth quarter 2015 adjusted operating income of $46.8 million, as compared to $37.5 million in the fourth quarter of 2014. Fourth quarter 2015 adjusted operating profit margin was 19.3% as a percentage of revenue, as compared to 16.0% in the fourth quarter of 2014. Full year 2015 adjusted operating income of $123.2 million, as compared to adjusted operating income of $116.5 million for 2014. Full year 2015 adjusted operating profit margin was 13.9% as a percentage of revenue, as compared to 13.7% in 2014.

Financial Guidance – Full Year 2016

For the full year 2016, the Company forecasts GAAP earnings per share from continuing operations in the range of $2.21 to $2.31 and on a non-GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share of $2.65 to $2.75.

Conference Call Information

The Company will discuss its fourth quarter and full year 2015 results and its outlook for business trends in a conference call on February 4, 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 12028033.

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 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 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

CONDENSED CONSOLIDATED INCOME STATEMENTS

Three Months Ended

Twelve Months Ended

(In thousands, except per share data)

January 3, 2016

December 28,
2014

January 3, 2016

December 28,
2014

Revenue

$

608,116

$

608,390

$

2,262,359

$

2,237,219

Cost of revenue

326,105

330,788

1,237,859

1,232,611

Selling, general and administrative expenses

158,505

216,648

598,848

659,335

Research and development expenses

30,030

30,966

125,928

121,141

Restructuring and contract termination charges, net

8,752

(579

)

13,590

13,390

Operating income from continuing operations

84,724

30,567

286,134

210,742

Interest income

(185

)

(292

)

(673

)

(667

)

Interest expense

9,433

9,063

37,997

36,270

Other expense, net

663

1,149

4,795

5,536

Income from continuing operations, before income taxes

74,813

20,647

244,015

169,603

Provision for (benefit from) income taxes

6,329

(10,667

)

31,327

8,437

Income from continuing operations

68,484

31,314

212,688

161,166

Loss from discontinued operations, before income taxes

(9

)

(754

)

(3

)

(4,959

)

(Loss) gain on disposition of discontinued operations, before income taxes

(2

)

121

(28

)

(260

)

Provision for (benefit from) income taxes on discontinued operations and dispositions

219

(106

)

232

(1,831

)

Loss from discontinued operations and dispositions

(230

)

(527

)

(263

)

(3,388

)

Net income

$

68,254

$

30,787

$

212,425

$

157,778

Diluted earnings per share:

Income from continuing operations

$

0.61

$

0.28

$

1.88

$

1.42

Loss from discontinued operations and dispositions

(0.00

)

(0.00

)

(0.00

)

(0.03

)

Net income

$

0.61

$

0.27

$

1.87

$

1.39

Weighted average diluted shares of common stock outstanding

112,563

113,448

113,315

113,739

ABOVE PREPARED IN ACCORDANCE WITH GAAP

Additional Supplemental Information (1):

(per share, continuing operations)

GAAP EPS from continuing operations

$

0.61

$

0.28

$

1.88

$

1.42

Amortization of intangible assets, net of income taxes

0.12

0.11

0.46

0.47

Purchase accounting adjustments, net of income taxes

0.00

0.01

0.05

0.01

Significant litigation matters, net of income taxes

0.00

(0.00

)

0.00

0.03

Acquisition-related costs, net of income taxes

0.00

0.03

0.00

0.03

Significant environmental charges, net of income taxes



(0.01

)



(0.01

)

Mark to market on postretirement benefits, net of income taxes

0.07

0.43

0.07

0.43

Restructuring and contract termination charges, net of income taxes

0.05

0.01

0.08

0.09

Adjusted EPS

$

0.86

$

0.85

$

2.55

$

2.47

(1) amounts may not sum due to rounding

PerkinElmer, Inc. and Subsidiaries

REVENUE AND OPERATING INCOME (LOSS)

Three Months Ended

Twelve Months Ended

(In thousands, except percentages)

January 3, 2016

December
28, 2014

January 3, 2016

December 28,
2014

Human Health

Reported revenue

$

365,467

$

374,698

$

1,376,644

$

1,384,223

Purchase accounting adjustments

169

227

797

2,916

Adjusted revenue

365,636

374,925

1,377,441

1,387,139

Reported operating income from continued operations

72,183

83,710

251,743

233,689

OP%

19.8

%

22.3

%

18.3

%

16.9

%

Amortization of intangible assets

15,827

18,508

61,868

73,218

Purchase accounting adjustments

199

(929

)

919

1,108

Acquisition-related costs

120

7

403

94

Significant litigation matters

812



812



Restructuring and contract termination charges, net

2,156

84

4,160

7,224

Adjusted operating income

91,297

101,380

319,905

315,333

Adjusted OP%

25.0

%

27.0

%

23.2

%

22.7

%

Environmental Health

Reported revenue

242,649

233,692

885,715

852,996

Reported operating income from continued operations

35,938

29,880

89,544

95,605

OP%

14.8

%

12.8

%

10.1

%

11.2

%

Amortization of intangible assets

4,190

3,014

16,689

10,154

Purchase accounting adjustments



2,425

7,275

1,595

Acquisition-related costs

72

2,836

307

2,965

Restructuring and contract termination charges, net

6,596

(663

)

9,430

6,166

Adjusted operating income

46,796

37,492

123,245

116,485

Adjusted OP%

19.3

%

16.0

%

13.9

%

13.7

%

Corporate

Reported operating loss

(23,397

)

(83,023

)

(55,153

)

(118,552

)

Significant litigation matters







6,645

Significant environmental charges



(1,191

)



(1,191

)

Mark to market on postretirement benefits

11,342

75,973

12,408

75,919

Adjusted operating loss

(12,055

)

(8,241

)

(42,745

)

(37,179

)

Continuing Operations

Reported revenue

$

608,116

$

608,390

$

2,262,359

$

2,237,219

Purchase accounting adjustments

169

227

797

2,916

Adjusted revenue

608,285

608,617

2,263,156

2,240,135

Reported operating income from continued operations

84,724

30,567

286,134

210,742

OP%

13.9

%

5.0

%

12.6

%

9.4

%

Amortization of intangible assets

20,017

21,522

78,557

83,372

Purchase accounting adjustments

199

1,496

8,194

2,703

Acquisition-related costs

192

2,843

710

3,059

Significant litigation matters

812



812

6,645

Significant environmental charges



(1,191

)



(1,191

)

Mark to market on postretirement benefits

11,342

75,973

12,408

75,919

Restructuring and contract termination charges, net

8,752

(579

)

13,590

13,390

Adjusted operating income

$

126,038

$

130,631

$

400,405

$

394,639

Adjusted OP%

20.7

%

21.5

%

17.7

%

17.6

%

REPORTED REVENUE AND REPORTED OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

January 3, 2016

December 28, 2014

Current assets:

Cash and cash equivalents

$

237,932

$

174,821

Accounts receivable, net

439,015

470,563

Inventories

288,028

285,457

Other current assets

68,186

137,710

Total current assets

1,033,161

1,068,551

Property, plant and equipment:

At cost

494,956

492,814

Accumulated depreciation

(327,927

)

(316,620

)

Property, plant and equipment, net

167,029

176,194

Marketable securities and investments

1,586

1,568

Intangible assets, net

490,811

490,265

Goodwill

2,279,189

2,284,077

Other assets, net

167,397

106,921

Total assets

$

4,139,173

$

4,127,576

Current liabilities:

Current portion of long-term debt

$

1,123

$

1,075

Accounts payable

152,726

173,953

Short-term accrued restructuring and contract termination charges

17,090

17,124

Accrued expenses and other current liabilities

388,446

403,021

Current liabilities of discontinued operations

2,100

2,137

Total current liabilities

561,485

597,310

Long-term debt

1,011,762

1,045,393

Long-term liabilities

455,485

442,771

Total liabilities

2,028,732

2,085,474

Total stockholders’ equity

2,110,441

2,042,102

Total liabilities and stockholders’ equity

$

4,139,173

$

4,127,576

PREPARED IN ACCORDANCE WITH GAAP

PerkinElmer, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Twelve Months Ended

January 3, 2016

December 28,
2014

January 3, 2016

December 28,
2014

(In thousands)

Operating activities:

Net income

$

68,254

$

30,787

$

212,425

$

157,778

Loss from discontinued operations and dispositions, net of income taxes

230

527

263

3,388

Income from continuing operations

68,484

31,314

212,688

161,166

Adjustments to reconcile income from continuing operations

to net cash provided by continuing operations:

Stock-based compensation

5,236

2,695

17,719

14,464

Restructuring and contract termination charges, net

8,752

(579

)

13,590

13,390

Amortization of deferred debt issuance costs and accretion of discounts

384

363

1,496

1,434

Depreciation and amortization

28,250

29,903

112,007

116,736

Losses on disposition



108



108

Amortization of acquired inventory revaluation



2,425

7,275

2,425

Pension and other postretirement expenses

9,420

77,669

9,420

77,669

Excess tax benefit from exercise of common stock options

(2,435

)



(2,435

)



Changes in operating assets and liabilities which provided (used) cash, excluding

effects from companies purchased and divested:

Accounts receivable, net

(29,601

)

(43,830

)

6,760

(16,989

)

Inventories

22,124

3,894

(28,700

)

(24,642

)

Accounts payable

3,834

12,112

(16,082

)

8,103

Accrued expenses and other

11,204

(19,463

)

(46,157

)

(71,596

)

Net cash provided by operating activities of continuing operations

125,652

96,611

287,581

282,268

Net cash used in operating activities of discontinued operations

(413

)

(47

)

(483

)

(671

)

Net cash provided by operating activities

125,239

96,564

287,098

281,597

Investing activities:

Capital expenditures

(11,818

)

(6,858

)

(29,632

)

(29,072

)

Proceeds from dispositions of property, plant and equipment, net



2,531



2,531

Proceeds from surrender of life insurance policies





757

490

Changes in restricted cash balances





59



Activity related to acquisitions and investments, net of cash and cash equivalents acquired

(53,305

)

(269,598

)

(72,040

)

(271,477

)

Net cash used in investing activities of continuing operations

(65,123

)

(273,925

)

(100,856

)

(297,528

)

Net cash provided by investing activities of discontinued operations



1,844



1,631

Net cash used in investing activities

(65,123

)

(272,081

)

(100,856

)

(295,897

)

Financing Activities:

Payments on revolving credit facility

(114,000

)

(51,000

)

(485,000

)

(356,000

)

Proceeds from revolving credit facility

104,000

248,000

451,000

475,000

Payments of debt issuance costs







(1,845

)

Settlement of hedges

(504

)



18,706



Net payments on other credit facilities

(272

)

(11,450

)

(1,072

)

(12,675

)

Payments for acquisition-related contingent consideration

(77

)



(103

)

(855

)

Excess tax benefit from exercise of common stock options

2,435



2,435



Proceeds from issuance of common stock under stock plans

1,824

3,508

14,905

24,455

Purchases of common stock

(281

)

(26,525

)

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