PERKINELMER INC [PKI] Filings

10-Q 1 pki-20221002.htm 10-Q pki-20221002

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 2, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-5075

_______________________________________

PerkinElmer, Inc.

(Exact name of Registrant as specified in its Charter)

_______________________________________

Massachusetts

04-2052042

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

940 Winter Street,

Waltham,

Massachusetts

02451

(Address of principal executive offices)

(Zip Code)

(781) 663-6900

(Registrant’s telephone number, including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, $1 par value per share	PKI	The New York Stock Exchange
1.875% Notes due 2026	PKI 21A	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 9, 2022, there were outstanding 126,315,920 shares of common stock, $1 par value per share.

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements	4
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Overview	28
	Critical Accounting Policies and Estimates	28
	Consolidated Results of Continuing Operations	29
	Reporting Segment Results of Continuing Operations	33
	Discontinued Operations	35
	Liquidity and Capital Resources	36
	Dividends	38
	Effects of Recently Adopted and Issued Accounting Pronouncements	38

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 6.	Exhibits	50

Signatures		51

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PART I. FINANCIAL INFORMATION

Item 1.Unaudited Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
	(In thousands, except per share data)
Product revenue	$	605,457	$	642,128	$	1,984,715	$	1,941,566
Service revenue	106,346		219,188		585,893		858,332
Total revenue	711,803		861,316		2,570,608		2,799,898
Cost of product revenue	271,744		277,809		879,832		809,355
Cost of service revenue	33,015		60,645		137,276		200,352
Total cost of revenue	304,759		338,454		1,017,108		1,009,707
Selling, general and administrative expenses	239,969		275,869		765,746		681,311
Research and development expenses	53,521		49,421		167,081		139,753
Restructuring and other costs, net	2,774		2,011		15,443		10,517
Operating income from continuing operations	110,780		195,561		605,230		958,610
Interest and other expense, net	28,638		60,549		91,840		54,732
Income from continuing operations before income taxes	82,142		135,012		513,390		903,878
Provision for income taxes	12,634		27,381		98,211		198,531
Income from continuing operations	69,508		107,631		415,179		705,347
Income from discontinued operations before income taxes	25,180		26,656		36,004		64,329

Provision for income taxes on discontinued operations and dispositions	9,341		6,549		9,662		16,703
Income from discontinued operations and dispositions	15,839		20,107		26,342		47,626
Net income	$	85,347	$	127,738	$	441,521	$	752,973
Basic earnings per share:
Income from continuing operations	$	0.55	$	0.94	$	3.29	$	6.25
Income from discontinued operations and dispositions	0.13		0.18		0.21		0.42
Net income	$	0.68	$	1.12	$	3.50	$	6.67
Diluted earnings per share:
Income from continuing operations	$	0.55	$	0.94	$	3.28	$	6.23
Income from discontinued operations and dispositions	0.13		0.17		0.21		0.42
Net income	$	0.67	$	1.11	$	3.49	$	6.65
Weighted average shares of common stock outstanding:
Basic	126,155		114,508		126,139		112,836
Diluted	126,540		115,022		126,544		113,307
Cash dividends declared per common share	$	0.07	$	0.07	$	0.21	$	0.21

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)


	Three Months Ended				Nine Months Ended
	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
	(In thousands)
Net income	$	85,347	$	127,738	$	441,521	$	752,973
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of income taxes	(190,745)		11,724		(487,095)		(48,857)


Unrealized gain on securities, net of income taxes	48		11		5		105
Other comprehensive (loss) income	(190,697)		11,735		(487,090)		(48,752)
Comprehensive (loss) income	$	(105,350)	$	139,473	$	(45,569)	$	704,221

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	October 2, 2022		January 2, 2022
	(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	400,741	$	603,320
Accounts receivable, net	540,867		707,941

Inventories	378,256		425,890
Other current assets	138,867		148,255
Current assets of discontinued operations	1,657,749		555,374
Total current assets	3,116,480		2,440,780
Property, plant and equipment, net	460,397		485,531
Operating lease right-of-use assets	160,120		164,040
Intangible assets, net	3,401,143		3,821,847
Goodwill	6,373,327		6,627,119
Other assets, net	312,297		312,887
Long-term assets of discontinued operations	—		1,148,350
Total assets	$	13,823,764	$	15,000,554
Current liabilities:
Current portion of long-term debt	$	503,549	$	4,240
Accounts payable	275,824		324,811

Accrued expenses and other current liabilities	471,570		728,445
Current liabilities of discontinued operations	234,788		156,248
Total current liabilities	1,485,731		1,213,744
Long-term debt	3,898,267		4,979,737
Deferred taxes and long-term liabilities	1,231,724		1,422,549
Operating lease liabilities	142,842		147,395
Long-term liabilities of discontinued operations	—		95,884
Total liabilities	6,758,564		7,859,309
Commitments and contingencies (see Note 15)
Stockholders’ equity:
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding	—		—
Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 126,220,000 shares and 126,241,000 shares at October 2, 2022 and January 2, 2022, respectively	126,220		126,241
Capital in excess of par value	2,754,716		2,760,522
Retained earnings	4,834,046		4,417,174
Accumulated other comprehensive loss	(649,782)		(162,692)
Total stockholders’ equity	7,065,200		7,141,245
Total liabilities and stockholders’ equity	$	13,823,764	$	15,000,554

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Nine-Month Period Ended October 2, 2022
	Common Stock Shares	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
		(In thousands)
Balance, January 2, 2022	126,241	$	126,241	$	2,760,522	$	4,417,174	$	(162,692)	$	7,141,245
Net income	—	—		—		176,962		—		176,962
Other comprehensive loss	—	—		—		—		(84,027)		(84,027)
Dividends	—	—		—		(8,905)		—		(8,905)
Exercise of employee stock options	18	18		1,379		—		—		1,397

Purchases of common stock	(307)	(307)		(55,285)		—		—		(55,592)
Issuance of common stock for long-term incentive program	188	188		12,282		—		—		12,470
Stock compensation	—	—		2,792		—		—		2,792
Balance, April 3, 2022	126,140	$	126,140	$	2,721,690	$	4,585,231	$	(246,719)	$	7,186,342
Net income	—	—		—		179,212		—		179,212
Other comprehensive loss	—	—		—		—		(212,366)		(212,366)
Dividends	—	—		—		(7,877)		—		(7,877)
Exercise of employee stock options	50	50		4,394		—		—		4,444
Issuance of common stock for employee stock purchase plans	13	13		1,813		—		—		1,826
Purchases of common stock	(3)	(3)		(453)		—		—		(456)
Issuance of common stock for long-term incentive program	12	12		12,260		—		—		12,272
Stock compensation	6	6		3,752		—		—		3,758
Balance, July 3, 2022	126,218	$	126,218	$	2,743,456	$	4,756,566	$	(459,085)	$	7,167,155
Net income	—	—		—		85,347		—		85,347
Other comprehensive loss	—	—		—		—		(190,697)		(190,697)
Dividends	—	—		—		(7,867)		—		(7,867)

Exercise of employee stock options	6	6		406		—		—		412
Issuance of common stock for employee stock purchase plans	1	1		30		—		—		31
Purchases of common stock	(1)	(1)		(88)		—		—		(89)
Issuance of common stock for long-term incentive program	(5)	(5)		8,976		—		—		8,971
Stock compensation	1	1		1,936		—		—		1,937
Balance, October 2, 2022	126,220	$	126,220	$	2,754,716	$	4,834,046	$	(649,782)	$	7,065,200

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	For the Nine-Month Period Ended October 3, 2021
	Common Stock Shares	Common Stock Amount		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
		(In thousands)
Balance, January 3, 2021	112,090	$	112,090	$	148,101	$	3,507,262	$	(31,961)	$	3,735,492

Net income	—	—		—		379,305		—		379,305
Other comprehensive loss	—	—		—		—		(72,211)		(72,211)
Dividends	—	—		—		(7,846)		—		(7,846)
Exercise of employee stock options	95	95		4,892		—		—		4,987
Issuance of common stock for employee stock purchase plans	—	—		8		—		—		8
Purchases of common stock	(295)	(295)		(42,484)		—		—		(42,779)
Issuance of common stock for long-term incentive program	176	176		4,274		—		—		4,450
Stock compensation	—	—		899		—		—		899
Balance, April 4, 2021	112,066	$	112,066	$	115,690	$	3,878,721	$	(104,172)	$	4,002,305
Net income	—	—		—		245,930		—		245,930
Other comprehensive income	—	—		—		—		11,735		11,735
Dividends	—	—		—		(7,826)		—		(7,826)
Exercise of employee stock options	128	128		9,070		—		—		9,198
Issuance of common stock for employee stock purchase plans	11	11		1,613		—		—		1,624
Purchases of common stock	(209)	(209)		(29,936)		—		—		(30,145)
Issuance of common stock for long-term incentive program	24	24		4,998		—		—		5,022
Stock compensation	5	5		1,959		—		—		1,964
Balance, July 4, 2021	112,025	$	112,025	$	103,394	$	4,116,825	$	(92,437)	$	4,239,807
Net income	—	—		—		127,738		—		127,738
Other comprehensive income	—	—		—		—		(53,759)		(53,759)
Dividends	—	—		—		(8,732)		—		(8,732)
Issuance of common stock for business combination, net of issuance costs	14,067	14,067		2,624,077		—		—		2,638,144
Exercise of employee stock options	107	107		8,773		—		—		8,880
Issuance of common stock for employee stock purchase plans	—	—		—		—		—		—
Purchases of common stock	(1)	(1)		(89)		—		—		(90)
Issuance of common stock for long-term incentive program	2	2		5,114		—		—		5,116
Stock compensation	—	—		1,481		—		—		1,481
Balance, October 3, 2021	126,200	$	126,200	$	2,742,750	$	4,235,831	$	(146,196)	$	6,958,585

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	October 2, 2022		October 3, 2021
	(In thousands)
Operating activities:
Net income	$	441,521	$	752,973
Income from discontinued operations and dispositions, net of income taxes	(26,342)		(47,626)
Income from continuing operations	415,179		705,347
Adjustments to reconcile income from continuing operations to net cash provided by continuing operations:
Stock-based compensation	39,776		16,718
Restructuring and other costs, net	15,443		10,517
Depreciation and amortization	322,766		197,386
Change in fair value of contingent consideration	(769)		1,553
Amortization of deferred debt financing costs and accretion of discounts and debt extinguishment costs	5,954		3,224
Change in fair value of financial securities	14,321		(8,566)

Amortization of acquired inventory revaluation	45,039		14,728
Gain on disposition of businesses and assets, net	—		(1,970)
Asset impairment	—		3,868
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net	120,138		231,924
Inventories	(44,475)		19,181
Accounts payable	(27,968)		(39,984)
Accrued expenses and other	(360,089)		(159,452)
Net cash provided by operating activities of continuing operations	545,315		994,474
Net cash (used in) provided by operating activities of discontinued operations	(4,663)		80,684
Net cash provided by operating activities	540,652		1,075,158
Investing activities:
Capital expenditures	(59,502)		(59,066)
Purchases of investments	(45,010)		(19,130)

Proceeds from disposition of businesses and assets	5,664		1,460
Proceeds from notes receivable	8,890		—
Cash paid for acquisitions, net of cash acquired	(7,768)		(3,967,678)
Net cash used in investing activities of continuing operations	(97,726)		(4,044,414)
Net cash used in investing activities of discontinued operations	(9,441)		(8,393)
Net cash used in investing activities	(107,167)		(4,052,807)
Financing activities:
Payments on borrowings	(220,000)		(1,191,125)

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Proceeds from borrowings	220,000		1,144,282
Payments of term loan	(500,000)		—
Proceeds from term loan	—		500,000
Payments of senior unsecured notes	(7,472)		(339,605)
Proceeds from sale of senior unsecured notes	—		3,086,095
Payments of debt financing and equity issuance costs	—		(30,983)
Settlement of cash flow hedges	(762)		(1,459)
Net payments on other credit facilities	(487)		(12,731)

Proceeds from issuance of common stock under stock plans	6,254		22,760
Purchases of common stock	(56,137)		(73,013)
Dividends paid	(26,502)		(23,539)
Net cash (used in) provided by financing activities of continuing operations	(585,106)		3,080,682
Net cash provided by financing activities of discontinued operations	—		—
Net cash (used in) provided by financing activities	(585,106)		3,080,682
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(51,404)		(16,584)
Net (decrease) increase in cash, cash equivalents and restricted cash	(203,025)		86,449
Cash, cash equivalents and restricted cash at beginning of period	619,337		402,613
Cash, cash equivalents and restricted cash at end of period	$	416,312	$	489,062

Supplemental disclosures of cash flow information
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents	$	400,741	$	472,374
Restricted cash included in other current assets	284		1,689
Restricted cash included in other assets	288		—
Cash and cash equivalents included in current assets of discontinued operations	14,999		14,999
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	416,312	$	489,062

Supplemental disclosures of non-cash investing and financing activities:
Equity issued for business combination, net of issuance costs	$	—	$	2,638,369
Contingent consideration accrued in business combination	4,961		33,431
Other liability incurred in business combination	4,005		8,467

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by PerkinElmer, Inc. (the “Company”), in accordance with accounting principles generally accepted in the United States of America (the “U.S.” or the “United States”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in the footnote disclosures of the financial statements has been condensed or omitted where it substantially duplicates information provided in the Company’s latest audited consolidated financial statements, in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended January 2, 2022, filed with the SEC (the “2021 Form 10-K”). The balance sheet amounts at January 2, 2022 in this report were derived from the Company’s audited 2021 consolidated financial statements included in the 2021 Form 10-K. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the three and nine months ended October 2, 2022 and October 3, 2021, respectively, are not necessarily indicative of the results for the entire fiscal year or any future period. In August 2022, the Company announced the proposed sale of certain assets and the equity interests of certain entities constituting the Company’s Analytical, Food and Enterprise Services businesses (the “Business”). The 2021 consolidated financial statements presented herein have been retrospectively adjusted to present the Business as discontinued operations for all periods presented.

Note 2: Revenue

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary geographical markets, primary end-markets and timing of revenue recognition.

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	Reportable Segments
	Three Months Ended
	October 2, 2022						October 3, 2021
	Discovery & Analytical Solutions		Diagnostics		Total		Discovery & Analytical Solutions		Diagnostics		Total
	(In thousands)
Primary geographical markets
Americas	$	165,340	$	170,478	$	335,818	$	106,742	$	280,367	$	387,109
Europe	72,150		103,925		176,075		50,726		220,264		270,990
Asia	75,293		124,617		199,910		50,043		153,174		203,217
	$	312,783	$	399,020	$	711,803	$	207,511	$	653,805	$	861,316&