SEC Filing Summary
Entity and period: The supplied filing is PerkinElmer, Inc.’s unaudited Form 10-Q for the quarter ended July 3, 2011, not a filing under the name Revvity, Inc. The fiscal year is reported on a 52-week basis. Amounts below are U.S. dollars; financial statement amounts are in millions unless otherwise noted.
Business context
PerkinElmer reported two segments: Human Health, serving diagnostics and research markets, and Environmental Health, serving environmental and safety, industrial, and laboratory services markets. The quarter included several acquisitions intended to expand imaging, diagnostics, laboratory software, and informatics offerings.
Financial performance
| Metric | Q2 2011 | Q2 2010 | First six months 2011 | First six months 2010 |
|---|---|---|---|---|
| Revenue | $479.5 | $421.6 | $927.4 | $815.2 |
| Gross margin | 43.6% | 44.9% | 44.1% | 44.7% |
| Operating income, continuing operations | $37.5 | $33.2 | $76.8 | $63.9 |
| Net income, continuing operations | $27.9 | $47.2 | $53.8 | $66.8 |
| Net income, including discontinued operations and dispositions | $28.6 | $57.6 | $52.1 | $82.0 |
| Diluted EPS, continuing operations | $0.25 | $0.40 | $0.47 | $0.57 |
- Q2 revenue rose 14% year over year, including approximately 6% from favorable foreign exchange and 4% from acquisitions. Segment revenue increased 11% in Human Health and 16% in Environmental Health.
- Q2 operating income increased, but continuing-operations income and EPS declined. The prior-year comparison included a $25.6 million pre-tax gain from remeasuring a previously held joint-venture interest; excluding that item, reported comparisons are less favorable to 2010.
- Q2 gross margin fell 130 basis points, primarily because of product mix, partly offset by higher volume and productivity. Operating margin was approximately 7.8%, versus 7.9% a year earlier. For the first six months, operating margin was approximately 8.3%, versus 7.8%.
- Segment operating income in Q2 was $27.6 million for Human Health, up 7%, and $20.7 million for Environmental Health, up 24%. First-half segment operating income was $48.3 million, up 1%, and $49.8 million, up 40%, respectively.
Cash flow, liquidity, and debt
- First-half cash from continuing operations was $102.2 million, compared with $114.0 million. Total cash from operating activities, including discontinued operations, was $94.6 million. Continuing-operations cash flow reflected a $19.3 million working-capital use.
- Cash used in continuing investing activities was $325.9 million, including $310.4 million for acquisitions and related costs and $16.0 million of capital expenditures. Financing activities of continuing operations provided $150.7 million.
- Cash and equivalents were $395.2 million at July 3, 2011, down from $420.1 million at January 2. Current assets were $1,076.2 million and current liabilities $559.4 million.
- Total debt was $671.0 million: $521.0 million drawn on a $650 million revolving facility and $150.0 million of 6% notes due May 2015. The company reported $116.0 million of additional revolving availability after letters of credit and compliance with applicable debt covenants.
- The company repurchased 4.0 million shares for $107.8 million under its repurchase program during the first half, and paid $16.0 million in dividends. The quarterly dividend was $0.07 per share.
Material changes, outlook, and risks
- Seven acquisitions were completed in the first half, including CambridgeSoft for approximately $227.4 million in cash. Net goodwill rose to $1.78 billion, from $1.50 billion at year-end. Purchase-price allocations remained preliminary; contingent consideration and integration costs may affect future results.
- Acquisition accounting reduced recognized revenue by $6.2 million in Q2 and $6.4 million in the first half for acquired deferred revenue obligations.
- Management described demand growth in environmental, food and consumer safety, laboratory services, academic research, and selected medical imaging markets. It also cited weaker pharmaceutical-company demand, lower U.S. birth rates and tight screening-lab inventories as offsets. No specific revenue or earnings guidance was provided.
- Management expected internal cash generation to fund operating expenses, capital expenditures, smaller acquisitions, interest, and dividends; larger acquisitions and certain long-term obligations could require external funding. It noted potential international pension contributions of up to $11 million by fiscal year-end.
- Key exposures include economic and customer-funding uncertainty, foreign exchange and variable-rate debt, acquisition execution and integration, intangible-asset impairment, regulatory and product-liability matters, and litigation. The company accrued $6.5 million for known environmental matters and reported an ongoing Enzo patent and commercial dispute that remained stayed; management did not expect the disclosed matters to have a material adverse effect, while acknowledging uncertainty.
- Management stated that disclosure controls were effective as of quarter-end and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the issuer identity: the filing itself identifies PerkinElmer, Inc.; the request metadata names Revvity, Inc.
- Assess underlying earnings against the prior-year joint-venture remeasurement gain and the effects of acquisition accounting, restructuring, and discontinued operations.
- Review acquisition integration, deferred-revenue adjustments, contingent consideration, and the final purchase-price allocations.
- Track cash conversion, working capital, acquisition spending, repurchases, revolving-facility availability, and debt covenant headroom.
- Monitor gross-margin recovery, segment demand trends, pension funding needs, tax exposures, and the status of material legal and environmental contingencies.