PerkinElmer, Inc. (PKI)

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PerkinElmer Inc. (PKI)

Q3 2010 Earnings Call Transcript

November 4, 2010 5:00 pm ET


Dave Francisco – IR

Rob Friel – Chairman, CEO & President

Andy Wilson – SVP, CFO & CAO


Ross Muken – Deutsche Bank

Dan [ph] – Macquarie

Peter Lawson – Mizuho Securities

Matt [ph] – Robert W. Baird

Dan Leonard – Leerink Swann

Derik De Bruin – UBS

Tony Butler – Barclays Capital

Brendan Krueger [ph] – Jefferies



Good day, ladies and gentlemen, and welcome to the third quarter 2010 PerkinElmer’s earnings conference call. My name is, Marcella, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Dave Francisco, Vice President of Investor Relations and Treasurer. Please, proceed.

Dave Francisco

Thanks, Marcella. Good afternoon and welcome to the PerkinElmer third quarter 2010 earnings conference call. With me on the call are Rob Friel, Chairman and Chief Executive Officer, and Andy Wilson, Senior Vice President and Chief Financial Officer.

If you’ve not received a copy of our earnings press release, you may get one from the Investors section of our Web site at or from our toll free Investor hotline at 1-877-PKI-NYSE. Please note this call is being webcast live and will be archived on our Web site until November 18, 2010.

Before we begin we need to remind everyone of the Safe Harbor statements that we’ve outlined in our earnings press release issued earlier this afternoon and also those in our SEC filings. Any forward-looking statements made today represent our views only as of today. We disclaim any obligation to update forward-looking statements in the future even if our estimates change. So, you should not rely on any of today’s forward-looking statements as representing our views as of any date after today.

During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of the non-GAAP financial measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP in that attachment, we will provide reconciliations promptly.

I’m now pleased to introduce the Chairman and Chief Executive Officer of PerkinElmer, Rob Friel.

Rob Friel

Thanks, Dave. Good afternoon and thank you for joining us for the PerkinElmer third quarter 2010 earnings call. We are pleased with our performance in the third quarter, delivering another strong quarter of both top and bottom line growth. Organic revenue grew 10%, adjusted operating margins expanded 110 basis points and adjusted net income increased 20%.

In addition to exceeding our financial commitments, I am especially pleased with our progress on two of our key strategic priorities; increasing the growth profile of the company and expanding operating margins.

Touching briefly on our end markets in Environmental Health, we experienced 14% organic growth with the growth being fairly broad-based as all of our market segments and geographic regions grew double digits.

In Human Health, organic revenue grew 5% as our diagnostic businesses grew in the high single-digits, lead by medical imaging, maternal and fetal health and infectious disease diagnostics in China. However, in the research markets, we were flat as growth in academic labs was offset by lower CapEx spending in pharma.

Given, Andy, will discuss our growth in the individual segments and specific financial results in more detail, I would like to focus my remarks on our recent progress in increasing the growth profile of the company and our success in expanding our operating margins.

Turning first to growth, as we have mentioned throughout the year, we are focused on four areas to improve our top line growth rate. These include emerging territories expansion, leveraging our capabilities into adjacent markets, new product innovation and business development.

In the third quarter, we made significant progress in all of these areas. In the emerging territories, we continued to experience strong growth as our revenue from China, India and Brazil grew over 20%, and we had several significant customer wins.

For example, last week, we received a major purchase commitment in western China to ensure pharmaceutical manufacturing compliance with recently implemented Chinese quality assurance regulations. China’s State Food and Drug Administration is in the process of outfitting 130 labs with over 200 PerkinElmer instruments to make sure that drug companies meet the new quality assurance standards.

Through our relationship with the SFDA and their recognition of our commitment to quality and service, we are able to help ensure safer drugs through our Western China. This win represents a strong validation of our ability to combine our analytical technologies and application-based expertise into a turnkey solution for our customers.

This quarter we also made progress in expanding into adjacent markets. For example, our medical imaging business continued to expand into new applications, adding 16 new OEMs since the beginning of the year and our OneSource service offering continues to expand outside of the farm industry, diversifying our customer base and expanding our addressable market.

During the third quarter, we continued to invest in innovative new products and I thought I would highlight a few products recently introduced. Our new NexION ICP-MS is targeted at environmental analysis needs and has an innovative orthogonal geometry, and also allows samples to be analyzed directly or following programs collisions with either neutral or reactive gases.

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