PerkinElmer, Inc. (PKI)

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PerkinElmer, Inc. (PKI)

Barclays Global Healthcare Conference

March 12, 2013 2:30 pm ET

Executives

Robert F. Friel - Chairman, Chief Executive Officer, President and Member of Finance Committee

Analysts

Charles Anthony Butler - Barclays Capital, Research Division

Presentation

Charles Anthony Butler - Barclays Capital, Research Division

Good afternoon. I'm Tony Butler. Thanks very much for attending the session. Rob Friel, who's the Chairman and CEO of a PerkinElmer is with us today. We also have Andy, the CFO, and Tommy Thomas, who's the Head of IR.

I did want to mention that we will have a breakout session just across the hall in New Yorker Sands.

The format will be Rob's going to actually make some introductory comments. He will have some slides. I'll probably ask a couple of questions depending on our time. We have 4 questions lined up for the audience response system. So beware, it'll be -- I think it'll be a lot of fun.

Rob, thank you for coming.

Robert F. Friel

Great. Thanks, Tony. Good afternoon, everyone, and as Tony said, I'll make a couple introductory comments. Before I do, I want to remind everyone to the extent that we have forward-looking comments here. We'd ask everyone to check with our website at www.perkinelmer.com and to the extent we use non-GAAP financials, we'll have a reconciliation to the GAAP financial statements.

Just wanted to spend a couple of minutes and just do a quick overview of PerkinElmer for you, to some of you that are not as familiar with the company. So you can see up there, it's a global technology company really focused in 2 areas: Human and Environmental Health.

A very global company. We operate in over 150 countries. We're in about 43 separate countries on a direct basis. As you can see up there, about 7,400 employees worldwide. Revenue in 2012 was about $2.1 billion with EBITDA of about $400 million, so about a 20% EBITDA number.

And then you can see the distribution of the 2 pies. First of all, on the left-hand side, you see the geographic distribution of our revenue. And just a couple of things I'll point out there is first of all, you see the emerging markets at 28% actually exceeds the amount of revenue we have in Western Europe. And then the other thing I would say on the other pie there, just pointing out the distribution of the products, with about 45% of our revenue coming from instruments and components, a little under 25% of our revenue in reagents and consumables and about 1/3 of our revenue in service and informatics. And I think that kind of provides us some nice resiliency, particularly in difficult economic environments, with now 55% of our revenue coming from service, informatics and consumables.

When I think about PerkinElmer, I would say, first of all, it's focused around 3 core capabilities. And actually, if you go back to the history of the company, it really is all about detection and, more recently, imaging. And then I would say in the more recent past, we've added our capabilities in informatics because as our instrumentation around detection and imaging continues to get better and better, generating more information, the informatics aspect of it is becoming increasingly more important.

So what I think about PerkinElmer is our ability to really detect things very accurately, in a lot of cases, very early. And we focus those in really 3 key end markets; 2 of those are really focused around the Human Health area, and those are diagnostics and life science research; and 1 of them is in the environmental space. And you can see up there from the slides, we're really focused on, as I mentioned before, we're using this detection and imaging capability to, first, on the diagnostics side, to hopefully find disease earlier and, therefore, improve the outcome for our patients and customers; and on the life science research area, we're really helping the pharmaceutical and biotech companies discover better drugs sooner; and then on the environmental side, similarly, trying to find things whether it's in air, water, food, even within the soil and identifying those contaminants early enough to avoid significant human health issues.

Just running through the 3 areas relatively quickly. The diagnostics area for us, I would say, diagnostics generally is probably a $50 billion or $60 billion market. For the areas we operate in, our addressable market is around $4 billion, and you can see on the left-hand side here, the 3 key areas that we are focused on: Newborn and prenatal screening, so think of it as sort of reproductive health; we have a business in infectious disease that is really focused in the emerging markets; and then we have a medical and imaging franchise. You see some of the growth drivers that why we believe this market can grow in the sort of 6% to 8% and, if you look historically, that's what this business has done.

And then on the right-hand side there, I lay out some of the capabilities, so whether it's our ability to detect biochemical and molecular indications. We have the digital x-ray panels that I talked about and we also have the strong informatics and service capability within this business.

I think some of the areas that allow us, some of the reasons why we're able to be successful here is, first of all, we've got some great market positions. So both in newborn and first trimester prenatal screening, we're #1 in the world. We've got some excellent customer relationships for long periods of time. And I think a very strong brand that's recognized across the globe. In many of these countries, we've been there for some 30 or 40 years.

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