PerkinElmer, Inc. — Q1 2021 Form 10-Q
Entity note: The supplied filing is for PerkinElmer, Inc. (NYSE: PKI), not Revvity, Inc. It covers the three months ended April 4, 2021, compared with the three months ended April 5, 2020; fiscal 2021 has 52 weeks, while fiscal 2020 had 53.
Business context and results
PerkinElmer supplies products and services in diagnostics, life sciences and applied markets through its Discovery & Analytical Solutions and Diagnostics segments. Revenue more than doubled, reflecting substantial growth in Diagnostics, including COVID-19 offerings, alongside a smaller increase in Discovery & Analytical Solutions.
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $1,307.7 million | $652.4 million | +100% |
| Gross margin | 60.0% | 47.2% | +1,283 basis points |
| Operating income | $467.8 million | $44.7 million | + $423.1 million |
| Operating margin | 35.8% | 6.8% | +2,892 basis points |
| Net income | $379.3 million | $33.7 million | — |
| Diluted EPS | $3.37 | $0.30 | — |
| Operating cash flow | $473.5 million | $60.1 million | — |
| Capital expenditures | $14.3 million | $20.5 million | — |
Segments and material changes
- Diagnostics: Revenue was $853.1 million, up 236%; operating income was $441.5 million versus $29.6 million. Growth came from the core portfolio and COVID-19 products.
- Discovery & Analytical Solutions: Revenue was $454.6 million, up 14%; operating income was $42.9 million versus $28.5 million. Life sciences growth included Informatics and pharma/biotech demand; applied markets benefited from industrial, environmental and food demand.
- Management attributed the margin improvement mainly to higher sales volume, favorable product mix, service productivity and pricing, partly offset by greater acquired-intangible amortization and investments in product development and growth.
- Reported revenue growth included approximately 5% attributable to acquisitions and divestitures and 3% to favorable foreign exchange. The comparison also reflects pandemic-related disruption and cost controls in the prior-year quarter, as well as the prior fiscal year’s extra week.
Liquidity, debt and capital allocation
- At April 4, 2021, cash and cash equivalents were $988.2 million; total current assets were $2,674.6 million and current liabilities were $1,520.5 million.
- Balance-sheet debt was $2,578.1 million, comprising $358.4 million current and $2,219.7 million long-term. The $1.0 billion revolving facility had no borrowings and approximately $989 million of available capacity. The company issued $800 million of notes due 2031 and 2051 in March; it redeemed $337.1 million of notes due 2021 on April 9, after quarter-end.
- Investing cash outflow was $461.9 million, primarily reflecting $443.5 million paid for acquisitions. Financing cash inflow was $583.0 million, including note proceeds and borrowings. Cash, cash equivalents and restricted cash ended at $990.4 million.
- The quarterly dividend was $0.07 per share. The company repurchased 233,000 shares under its authorization for $33.6 million and repurchased additional shares for employee tax withholding and option obligations.
Outlook, risks and unusual items
- The filing provides no specific full-year revenue or earnings guidance. Management said it expected elevated demand for COVID-19 products to continue into Q3 FY2021, while emphasizing that its sustainability depended on testing demand and the ability to develop, produce and staff related offerings, including testing laboratories.
- Management warned that pandemic disruption could continue to weigh on growth, particularly in Discovery & Analytical Solutions, and could affect operations, supply chains, demand and cash flows. COVID-related Diagnostics demand and inventory valuation were also uncertain.
- Oxford Immunotec was acquired in March for approximately $590.9 million; total consideration for two first-quarter acquisitions was $593.4 million. Purchase-price allocations were preliminary, and acquired goodwill and intangibles increased.
- Interest and other income included a $19.3 million gain from a change in fair value of financial securities. The effective tax rate was 21.1%, versus 2.8% in the prior-year quarter, partly reflecting the prior period’s tax benefits.
- One Diagnostics customer represented approximately $205.6 million of quarterly revenue. Environmental remediation accruals were $12.1 million; management said known environmental and other legal matters were not expected to have a material adverse effect, while noting outcomes remain uncertain.
- Other stated exposures include substantial debt, foreign exchange and interest-rate risk, acquisition integration and impairment risk, regulatory and product-liability exposure, and possible supply-chain disruption. Management assessed disclosure controls as effective and reported no material change in internal control over financial reporting.
Investor facts to verify
- Confirm the filing issuer: the document identifies PerkinElmer, Inc. (PKI), not Revvity, Inc.
- Assess how much of the exceptional Diagnostics growth and profitability depended on COVID-19 testing demand, and whether that demand persisted beyond the stated Q3 expectation.
- Review Oxford Immunotec integration, final purchase-price allocations, acquired-intangible amortization and any resulting impairment or earnings effects.
- Reconcile debt maturities and post-quarter repayment of the 2021 Notes with cash balances, available revolver capacity and future acquisition or capital-return plans.
- Consider the large prior-year comparison effects, including pandemic disruption, prior-period tax benefits and the extra fiscal week in FY2020.