PerkinElmer, Inc. — FY2013 Form 10-K
Filing identity and period: The supplied filing is PerkinElmer, Inc.’s Form 10-K for the fiscal year ended December 29, 2013 (52 weeks), filed February 25, 2014. It is not identified as a filing by Revvity, Inc.; investors should confirm the company and filing match the request. FY2013 Q4 figures are also shown below. Unless stated otherwise, amounts are U.S. dollars.
Business context
PerkinElmer supplied diagnostic and research products and services through Human Health, and analytical instruments and laboratory services through Environmental Health. At the start of 2013, the company moved its Informatics business and certain field service operations into Human Health; prior-period segment figures were retrospectively adjusted. About 60% of FY2013 revenue came from international operations.
Financial performance
| Metric | FY2013 | FY2012 | Change |
|---|---|---|---|
| Revenue | $2,166.2 million | $2,115.2 million | +2% |
| Gross profit / margin | $977.0 million / 45.1% | $963.2 million / 45.5% | Margin down 0.44 percentage points |
| Operating income / margin | $217.4 million / 10.0% | $98.5 million / 4.7% | Operating income +121% |
| Income from continuing operations | $167.9 million | $68.4 million | +145% |
| Net income | $167.2 million | $69.9 million | +139% |
| Diluted EPS | $1.47 | $0.61 | Up from prior year |
| Cash from continuing operating activities | $158.1 million | $153.6 million | +$4.5 million |
| Capital expenditures | $39.0 million | $42.4 million | Down $3.4 million |
Cash from continuing operations less capital expenditures was approximately $119.1 million. This is a simple calculation, not a company-reported non-GAAP measure.
- Segments: Human Health revenue was $1,209.8 million (+3%) and operating income was $146.1 million, versus $59.2 million in FY2012. Environmental Health revenue was $956.5 million (+2%), while operating income declined to $97.1 million from $111.8 million.
- Balance sheet and liquidity: Cash and equivalents were $173.2 million; current assets $1,044.8 million and current liabilities $602.8 million (current ratio approximately 1.73). Debt carrying value was about $934.7 million, including $397.0 million drawn on the revolving facility and $40.3 million of financing-lease obligations. The company reported $291.0 million of additional borrowing capacity under the then-existing facility.
- Shareholder returns: FY2013 dividends were $0.28 per share. The company repurchased approximately 3.6 million shares in the open market for $123.0 million under its repurchase program.
Material changes and unusual items
- Revenue growth was supported by diagnostics, informatics, in-vivo imaging and laboratory services. Lower demand in some environmental and industrial products, medical imaging and radiometric research offerings partly offset growth.
- Gross margin declined amid pricing pressure and an unfavorable product mix, partly offset by productivity improvements. Operating income rose sharply largely because FY2012 included $74.2 million of impairment charges versus $6.7 million in FY2013, and because postretirement-plan mark-to-market results shifted from a $31.8 million loss in FY2012 to $17.6 million of income in FY2013.
- FY2013 income taxes included a $14.6 million benefit, including $24.0 million of discrete tax benefits. Reported earnings therefore benefited from items that may not recur.
- In December 2013, the company redeemed its $150.0 million 6% notes due 2015, paying an $11.1 million premium; related hedge-loss and debt-cost write-offs were also recorded.
- FY2013 restructuring and contract-termination charges were $33.9 million. The company expected savings exceeding $9 million annually beginning in FY2015 from FY2013 actions; FY2012 actions were expected to generate savings exceeding $11 million annually beginning in FY2014.
- The Boston facility sale-leaseback generated $47.6 million of net proceeds. The company deferred $26.5 million of gain for amortization over the initial 15-year lease term.
Q4 performance and outlook
FY2013 fourth-quarter revenue was $593.3 million, compared with $572.9 million in FY2012. Operating income was $84.7 million versus a prior-year operating loss of $30.8 million; net income was $66.9 million versus a loss of $15.9 million. The year-over-year comparison was substantially affected by FY2013 pension mark-to-market income and tax benefits, and FY2012 impairment and pension charges.
Management did not provide numerical FY2014 revenue or earnings guidance in the supplied text. It expected FY2014 capital expenditures to be similar to FY2013 and planned continued R&D investment. The filing describes growth opportunities in diagnostics, testing driven by contaminant regulation, and laboratory services, while noting pressure in certain end markets.
Risks and contingencies
- Demand is sensitive to economic conditions, government and research funding, customer capital spending, order timing and market-specific trends; quarterly results may fluctuate.
- Other key risks include competition and product obsolescence, acquisition integration and contingent payments, reliance on some limited or single-source suppliers, foreign currency and international operating exposure, regulation, intellectual-property disputes, and pension and interest-rate sensitivities.
- Environmental remediation accruals were $13.5 million at year-end; management said estimates could change as investigations progress.
- A long-running Enzo Biochem intellectual-property lawsuit was expected to go to trial in March 2014. Management believed its defenses were meritorious and did not expect a material adverse financial-statement effect, but acknowledged uncertainty.
- On January 8, 2014, the company refinanced its $700 million revolving credit facility, extending its initial maturity to January 8, 2019. It reported covenant compliance at December 29, 2013.
Important facts for investors to verify
- Confirm that this PerkinElmer FY2013 filing is the intended issuer and period, given the request names Revvity, Inc. and 2013 Q4.
- Review how much of the FY2013 earnings increase reflects recurring operating performance versus impairment, pension mark-to-market and discrete tax effects.
- Assess the decline in Environmental Health operating income and the durability of Human Health growth and restructuring savings.
- Verify debt, available revolver capacity and the terms of the January 2014 refinancing; consider the cash held overseas and potential tax costs on repatriation.
- Track the Enzo litigation, environmental remediation exposure, pension funding needs and execution of the stated cost savings.