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
)
<