PerkinElmer, Inc. (PKI)

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PerkinElmer (PKI)

Q4 2010 Earnings Call

February 03, 2011 5:00 pm ET


Frank Wilson - Chief Financial Officer, Chief Accounting Officer and Senior Vice President

David Francisco - Assistant Treasurer of Perkinelmer Las Inc. and Assistant Treasurer of Perkinelmer Automotive Research Inc

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


Dane Leone

Rafael Tejada

Ross Muken - Deutsche Bank AG

Peter Lawson - Mizuho Securities USA, Inc.

Jeff Ares

S. Brandon Couillard - Jefferies & Company, Inc.

Matthew Notarianni - Robert W. Baird

Paul Knight - Credit Agricole Securities (USA) Inc.



Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2010 PerkinElmer Earnings Conference Call. My name is Yvette, and I will be your operator for today. [Operator Instructions] I would now like to turn the call over to Mr. Dave Francisco, Vice President of Investor Relations. Please proceed, sir.

David Francisco

Thank you very much. Good afternoon, and welcome to PerkinElmer Fourth Quarter 2010 Earnings Conference Call. With me on 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 website 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 website until February 17, 2011.

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.

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

Robert Friel

Thanks, Dave. Good afternoon, and thank you for joining us for the PerkinElmer Fourth Quarter 2010 Earnings Call.

We are pleased with our performance in the fourth quarter, delivering another solid quarter of both top and bottom line growth. Organic revenue grew 9%, adjusted operating profit margins expanded 60 basis points and adjusted earnings per share grew 19%.

In addition to exceeding our financial commitments we continued to make great strides on our strategic priorities. Touching briefly on our end markets, both the Human and Environmental businesses performed well in the quarter. In Human Health, organic revenue grew 9%, with our Diagnostic businesses growing mid-teens, led by medical imaging and maternal and newborn health. In the research market, we grew mid-single-digits, led by the academic market and strong growth in our cellular imaging offerings. In Environmental Health, we experienced 10% organic growth, driven by strong demand related to new and more stringent regulations for environmental and food safety.

Andy will provide additional color around our end markets and our financial results in more detail later on this call. I will focus my remarks on the continued progress we made this quarter on two of our strategic priorities, increasing the growth profile of the company and expanding our operating margins.

In the fourth quarter, we significantly improved our top line through continued expansion in emerging territories, leveraging our capabilities into adjacent markets, new product innovations and key customer wins. Revenues from emerging territories now exceed 25% of our total revenue and are growing overall at a mid-teens rate. Within each of the BRIC countries, we're experiencing growth greater than 20%. In addition, we had several important customer wins in these regions and we continue to invest in the infrastructure for future growth.

During the quarter, we placed a number of our recently introduced newborn screening systems in emerging markets to facilitate growth there. And while it puts some pressure on our gross margins, it will accelerate our growth and help provide critical neonatal screening technology to those who need it. We also partnered with key health officials in Russia as they expand their newborn screening efforts through the country's first dried blood spot test.

Our recent investments in Asia included a new software center of excellence in Shanghai, which will build upon our software capabilities and improve our time-to-market.

We also established a center in Bangkok that will enable us to leverage our local expertise and capabilities and drive deeper penetration into the growing Southeast Asian market.

This quarter, we continued to expand in adjacent markets. Our Medical Imaging business broadened its offerings to include new applications, including securing our first veterinarian customer, as well as adding five new non-medical OEMs.

Our market-leading OneSource service franchise also reached new heights this quarter as it continues to experience strong geographic expansion and has doubled its revenue over the past five years.

During the quarter, we also introduced a series of innovations targeted to advancing Human and Environmental Health, including last week's announcement of the launch of our next-generation DNA sequencing and data analysis services.

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