Business context and reporting period
Unaudited Form 10-Q for the quarter ended October 2, 2022 (third quarter of fiscal 2022), filed by PerkinElmer, Inc. The filing reports continuing operations in Discovery & Analytical Solutions and Diagnostics; comparative periods were recast to show the Analytical, Food and Enterprise Services businesses as discontinued operations. The request identifies Revvity, Inc., while the filing names PerkinElmer, Inc.; verify the entity and ticker mapping.
Financial performance
Amounts below are in millions of dollars, except per-share data. Comparisons are with the corresponding 2021 period.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Continuing-operations revenue | $711.8 | $861.3 | $2,570.6 | $2,799.9 |
| Gross margin | 57.2% | 60.7% | 60.4% | 63.9% |
| Operating income, continuing operations | $110.8 | $195.6 | $605.2 | $958.6 |
| Income from continuing operations | $69.5 | $107.6 | $415.2 | $705.3 |
| Net income, including discontinued operations | $85.3 | $127.7 | $441.5 | $753.0 |
| Diluted EPS, continuing operations | $0.55 | $0.94 | $3.28 | $6.23 |
| Diluted EPS, total | $0.67 | $1.11 | $3.49 | $6.65 |
Q3 revenue fell 17.4%; nine-month revenue fell about 8%. Q3 continuing-operations operating margin was approximately 15.6%, versus 22.7% a year earlier; the filing reports a 714-basis-point decline. Nine-month operating margin was approximately 23.5%, versus 34.2%. The lower gross margins reflected acquired-intangible amortization and lower COVID-19 revenue; nine-month costs also reflected supply-chain disruption and inflation.
- Segments: Q3 Discovery & Analytical Solutions revenue rose 51% to $312.8 million, with operating income of $32.6 million versus a $19.3 million loss. Diagnostics revenue fell 39% to $399.0 million and operating income fell 60% to $94.7 million.
- Drivers: Diagnostics Q3 COVID-19 product revenue declined $231.2 million; core portfolio revenue increased $17.0 million. Discovery & Analytical Solutions growth reflected acquisitions and life-sciences demand, partly offset by foreign exchange.
- Discontinued operations: Q3 revenue was $320.6 million and pretax income $25.2 million; nine-month revenue was $950.8 million and pretax income $36.0 million.
Cash flow, debt and liquidity
- For the first nine months, continuing-operations operating cash flow was $545.3 million, down from $994.5 million. Management attributed the decline chiefly to lower profitability and $312.4 million of net working-capital cash use.
- Capital expenditures were $59.5 million. Continuing-operations investing cash use was $97.7 million; financing cash use was $585.1 million, including $500 million of term-loan repayment, share repurchases and dividends.
- At October 2, cash and cash equivalents were $400.7 million; the company reported $1.5 billion available under its revolving credit facility. Long-term debt carrying value was $3.898 billion and current debt was $503.5 million. Total debt carrying value was approximately $4.402 billion.
- Cash, cash equivalents and restricted cash at period-end were $416.3 million, including cash classified within discontinued operations and restricted cash.
- The company declared quarterly dividends of $0.07 per share. It had $300 million available under a new share-repurchase authorization, but made no repurchases under that program during Q3.
Material changes, outlook and risks
- In August 2022, the company agreed to sell the Analytical, Food and Enterprise Services businesses for up to approximately $2.45 billion, including about $2.30 billion payable at closing, subject to adjustments, and up to $150 million in contingent post-closing payments. Closing was expected in Q1 fiscal 2023, subject to regulatory approvals and customary conditions. Management expected approximately $2.23 billion of proceeds and planned to use them for debt maturities, potential share repurchases and strategic acquisitions.
- Management expected internal cash generation to fund operating expenses, capital spending, smaller acquisitions, interest and dividends; it expected to use external sources for certain larger needs and debt maturities. It planned to continue paying down debt, including through repurchases of 2023 and 2024 notes as market conditions permit. No numerical earnings or revenue guidance is provided in the supplied filing text.
- A $117.8 million nonrefundable California Department of Public Health prepayment was recognized as Diagnostics revenue in Q2 after the contract ended, an unusual item relevant to year-to-date comparisons.
- Key risks include continued decline in COVID-related demand, foreign-exchange movements, economic and funding uncertainty, supply-chain and inflation pressures, acquisition integration and intangible-asset impairment, debt and refinancing exposure, and execution or approval risks for the planned divestiture. The company reported $9.8 billion of net intangible assets and substantial goodwill.
- Environmental remediation accruals were $12.3 million. Management said pending legal and other matters were not expected to have a material adverse effect, while noting outcomes remain uncertain.
Investor verification points
- Confirm the filing entity, reporting-period mapping and relationship to the requested Revvity, Inc. company identifier.
- Track completion, final proceeds, adjustments and contingent payments for the planned divestiture, and how proceeds are allocated.
- Assess the pace of COVID-related revenue decline against core Diagnostics growth and the prior-period California contract revenue recognition.
- Reconcile continuing-operations cash generation, working-capital use, debt maturities and post-quarter note repurchases.
- Monitor acquisition-related amortization, goodwill and intangible-asset valuation, foreign-exchange impacts, and any updates to guidance or risk disclosures.