PKI - Earnings call transcript Q2 2020

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Bryan Kipp

Good afternoon, and welcome to the PerkinElmer Second Quarter 2020 Earnings Conference Call. With me on today’s call are Prahlad Singh, President and Chief Executive Officer; and Jamey Mock, Senior Vice President and Chief Financial Officer.

If you have not received a copy of our earnings press release, you may get one from the Investors section of our website at www.perkinelmer.com. Please note this call is being webcast live and will be archived on our website until August 11, 2020.

Before we begin, we need to remind everyone of the safe harbor statements that we have outlined in our earnings press release issued earlier this afternoon and also those in our SEC filings. the on but may to, are or statements made which forward-looking financial comments expectations other include, objectives, may not of or this be call statements, projections or Statements intentions. plans, company's necessarily limited certain uncertainties. These matters and involve risks results are significantly from actual on SEC discussed by in or those variety a differ due filings. statements detail forward-looking to may of company's projected suggested The any factors, which our of statements made our today. today as forward-looking Any views represent only forward-looking of statements other estimates our update the statements disclaim future should our to We of date any representing if in change, not even obligation any as today. as views rely today's you after so on any forward-looking

that non-GAAP call the referring available President extent use will call, Singh. reconciled now Executive use During measures earnings financial certain to in non-GAAP to this to I we financial To of the be PerkinElmer, this Officer to during attachment directly an plan we Chief Prahlad? press attachment, is the the will introduce to promptly. measures financial release. provide are pleased GAAP comparable GAAP measures. most this am reconciliations non-GAAP our not we to and that measures as we A of Prahlad call during reconciliation

Prahlad Singh

Thank be that obstacles have you, start, more To at Bryan not have and past met the faced months. good I proud few we could afternoon everyone. the PerkinElmer of how us

action met pandemic. during and agile every these resilient, have help and a with and be global organization. and PerkinElmer, big to responsive being the call to proven a rallying At by our single are small have presented to responding collectively, Individually We to new challenges challenges, day. employees we all

to the energy PerkinElmer recognize was daily above our the purpose who employees systems improving and first quarter ramp up and countless second demonstrated healthcare during COVID-XX same through and to to perseverance went and our I DNA. that palpable. late The Whether with or governments night, the team. customer purpose time-sensitive quarter colleagues kit way over the assembly in best culture. sites. it again and and urgent test testing hospitals, I call, delivering products and PerkinElmer As scaling is I personally throughout number determine pervaded over the organization what very testing, or rapidly of beyond. to mentioned the impassions It fulfill passion is underpins needs lives discussions on that quickly our felt passion,

of portfolio results speak second Our detail truly a diversity and effort business from strong the standpoint. team quarter a Jamey geographic further performance. second about our were will quarter our reinforce and more in

However, delivered bottom strong overall line severe macroeconomic and results, headwinds. very top we despite

our XX% Our declining last declining year. Discovery excluding and COVID-related and million, of with core contributed the sales quarter XX% $XXX non-COVID organically COVID XX% to compared diagnostics, growth declined Solutions Analytical and second portfolio XX% of

fruit. and We would a the better to nimble bearing compared the We of collaborative, before XXX% undertake decision delivered PerkinElmer transformation the our by take years the century. and the of largest organizational made share but of terms operating the progress largest responsive our the free the we the adjusted PerkinElmer the to we in Not PerkinElmer dramatically position day more be with the a And change months XX% a conscious At pandemic then, future. iterative summer, changes taught in history we to over organization. and an year. has quarter we adjusted margins. XX% company's profitability, creation us to profitability time, in over of unbeknownst In modern last since grew it per the earnings was XXXX, needed real best quarter for over did over become as adjusted global past cash only of flow XXXX. organization ahead second transformed would

However, looking ideal. back, more timing not been have could the

that half employees fastest first reduced that red in decisions. the launching breakthrough has by clip at collaboration resulted seen taken tape, my We’ve with performance promoted innovations struck right validates the and I've actions in the in chord career. we've XXXX ever a Our cross functional

first new seven COVID-related products and over have products help While the in I so, lot up pipeline. have we spending year will I through COVID I solutions launched refrain and a talking hour could from for easily solutions questions through because know recent and we dozen product you several months teed have But the to all our Q&A. do a more next introductions, combat of of the the

products Additionally, performance we delivers triple-quad multi-quadrupole beyond traditional the NexION XX phenomenal stability unmatched and ICP-MS high and XXXX, with the being significant launched technology most true tolerance. non-COVID ICP-MS, resolution matrix which of have year-to-date one with a

handling also researchers option allowing rate, Plus, We Phenix fast and marries response frame screening Opera expanded imaging imaging assays, research. with cardiology launch portfolio liquid which automated fast flagship and to system fully ideal premium our the the of with a cellular for tackle our high-content neurology

we needed. different insights. viral that of In of fronts. of If will that to will principles call, immune splitting fight against so. direct both to the actively types help doing quarter expansive remain our additional from join landscape There We two one be into first diagnostics be many during you utilize detection the solutions committed capabilities guiding our to on are to our pandemic need, four response see the investigating earnings broad and COVID recall was categories, tests COVID-XX. to future We

some of all circulating panel that appear believe been flu of flu have add are work the cell that hope antibody we well On the the detection solutions, full as of commercially patients addition into has as COVID-related both together before brings months, the available suite recent a be the season looking side, to antibodies that testing, will our to ELISA There that over past respiratory start durable viral in as in few we not mediated response. On research we only innate fall. to insights, are story. immune antigen point increasing suggests and part COVID and or the care immunity infected PCR of the

we result, have response, in understanding industry. levels may at being cell system forefront innovation and development immune hope clinicians has will that analytical of a help broader the a aid we history protection, how for researchers cellular patient's tools damage. As of T the or in cytokine storied assays including several a PerkinElmer the in

common passionate solutions customer about address or Our markets developing points teams operate. pain unmet are we needs the in solve that

pharmaceuticals spanning diagnostics throughput specialty high hospitals, labs, customer for science offerings, has the to science. Lübeck, speed we our looked R&D clinics, academia our vital and always and our and to Underlying automation, that first Each in biopharmaceutical ahead COVID had many. the in trust will confidence scientists ran with combating We and extraction, From so ELISA have RNA our approach the pandemic. we owned Specific never back. no manufacturing and RT-PCR, and proved in our our government with different. in to and research is full technologies reference have labs, and this Taichung in always flow-based Turku lateral off Texas been testing lead and has capabilities COVID, have our of group serology institutes us

continue Our the and of pockets proven commitment be in especially in producing shortages high bottlenecks COVID to and light around a has to to quality differentiator. and will world tests, delivering be

the test increase maintain our time and centers testing capacity respond are turnaround now the to crisis. a this for advantage The PerkinElmer needs. to of own live labs has we delivery also for streaming transparency fact, during PerkinElmer forefront team Having and has during allow be to maximum in pandemic. been our evolving at public labs In enable health competitive network been the rapidly instrumental of COVID PerkinElmer to clinical genomics helping

are of diagnostics to needs, company and the only because respond commercial to testing a CAP we lab. been certified have with one and life quickly We able internal CLIA market more sciences

test in-house. develop better them labs ability real And for our testing us Our to us for suite the Moreover, It to equity they a and validate our full to with in it partnerships lab the in demo more need ability looking full of impactful Combating affords Pittsburgh to in customers has our brand clinical difference. workflow solutions energized way of up wake allows in we COVID organization opportunities have solutions new built make scale. trust. across allows the and science, time us to the agile our optimize opened setting larger, doors what to enhanced our COVID from to even can the globe also deliver a customers. actively rigorously has most to

the around Wales. have partner PerkinElmer collaborations, such governments world with For Public Health our partnership on with to as chosen example, milestone

the the We gratitude work feedback are honored with and on collaboration. filled with recent they we press are them for provided in their to release

the companies, around well collaborations We the networks ministries have top in to of swiftly reagents clock and instruments national similar as up state providing and delivering across various labs of setting support world, and organization. testing health hospitals, labs, health as engaged

For Semaphore with we collaborations Quest recently Arizona. its as State example, with announced partnership Sonora the well through as Laboratories with of

of our Region past We Germany, I'm entire Department has and in of New global year, us Again, of received Minister over in Georgia there resolute. is make PerkinElmer more of a software. Services testing the our From State the a to we organization. humbled proud Esoteric footprint solutions, the also about Health and the Laboratory, changed learn world, help lot site global Molecular this helped and and focus uncertainty from by in working our systems, teamed with Prime EUROIMMUN up determination the Brazil, Texas much labs a and the in at on the impact. is Lübeck, while Zealand test automation visit at drive-through to our

I Our beyond, and go thank and them, above you. continue to XX,XXX say, have employees to

some and solution. to As issues justice climate a remarks, social to a to better. are At on do a that and be We we changing all comments. want I global moment is COVID more proactive be more ever important make to living take to part PerkinElmer, a resources. due we in my challenging the to do to aside, need better, I role constraints Setting of take or need change, close increasing world, prepared but general

I even era us, we ring enter an to where report and our share with you a company needs we feedback as since PerkinElmer, voice are report, to beyond louder. Ask I your it will in invite results as this about same the read any they financial over more all do make detail. are also a that, passionate and the our corporate helping extends thing. what our and very includes It's responsibility you It We which because individual. quarter, the our planet. tell second debuted do, we put we PerkinElmer but personal, stake the we it people. employee, to latest social will truly in better discuss ground a to the world that our place. communities Jamey? in to together this turn was for With during It helping Jamey timely

Jamey Mock

Thanks, global by safe Prahlad at start, evening, hope I good To are I thanking would like you to team Prahlad’s PerkinElmer. everyone. the and all well. doing and comments echo

through a passion We have months lot of all and amazing. the change team's been been dedication has our past over and XX

you So everyone. a big to thank

spent amount We potential Over more time leaders, me disproportionate I future And profitability of especially and identified our the that opportunities. even our the strategy, applied a pipeline of we these have opportunities advantages PerkinElmer. with and about understand segment product significant businesses, go-to-market past businesses. excited my our within future three evaluated of to the strategy months, working competitive and food

postpone determined to will reinforce to be amount take inability changed. the time point, Day future On Day, discussions portfolio, since there have our us the external making also the some position current been we due a in our of in Analyst environment, learnings get non-COVID the will that to on in related given democratize sure future. our a lot we XXXX. a said to wanted last progress originally which will we to significant our portfolio to been in be September but and our of That's community, planned together to with time for those dramatically date person has I We well recognized of have Analyst

markets end Given this, host to the our to webinars, virtual over our product walk coming portfolios and quarters. hope is through

people quarter second presentation our Before the I remind posted been to call investor I section information. has our that on of website financial want began, earnings under

At well remarks customer a metrics. and end year prepared details assist third I in first we second XX% guidance related as year-over-year, June, across were are headwind momentum fully to my quarter There begin I'll Then in business will acquisition April of than financial with yet grew and but our served some X% COVID will I normalize. always, additional color globe we second revenue The modeling. our net your a hopefully that the the included Organic which quarter. severely a well signs Revenue provide highlighting business full half quarter some May. And executed level, updated and will by shutdowns, million, markets just has activity on and exchange impacting results. pleased with tailwind. own to better activity is communicated. by had end improving as X% you in previously X% high team foreign and As extremely $XXX what increased XX% some

Prahlad businesses as organically As in COVID modest representing organically primarily more performance Discovery quarter. of all genomics our life was better serology contributed health Solutions contributing China sales sciences business, franchise. of lines improved low total was digits. diagnostics double more extraction products overall product XX% Europe By solutions expected of representing RNA Analytical markets. three than grew Asia-Pacific and an mentioned reproductive On by with to each by flat. the of food immunodiagnostics tests, these offset than decline than sales as our and in propelled kits. declined applied digits of million the during our in a double related sequentially. earlier, applied America's million and PCR in business XX% and second strong XX% basis, total & offset excess was geographic XX% $XXX Demand quarter, grew strengthen across strong our increased softness $XX

and anemic Adjusted and margins non-COVID earnings disease leading clinical and expense XX.X% extremely However testing are growth allergy basis testing. deferments $X.XX the operating Adjusted share productivity diagnostic quarter remained in infectious ongoing caution, and operating XXX prenatal was to quarter led pleased per loss year-over-year. autoimmune second expanded second performance. as to we Operationally, in with XX% demand negative points our due in increased business to by leverage. the by mix,

drivers into further Looking key the Diagnostics segments, business. let's start our within with our

organic XX% my in the as drove organic remarks, XX% revenue regions the momentum greater increased growth. Europe in earlier generating mentioned Americas As and with both robust than growth

Combined led applied including strong RT-PCR our of quarter, by product and the Our all geographies the across XX%. several organic serology customer Performance declined throughout have with broad-based The and our lines grew XX% across in vital testing the genomics handling nucleic acid globe. lines. growth digits, more than detection EUROIMMUN COVID increasing prominent assays all consistent lower these automated be in to over liquid globe. mid-single the business on three led and momentum of product health PerkinElmer strong extraction for six our geographic was and particularly driven quality they COVID times across organically year-over-year, high-throughput Meanwhile, upstream by as XXX% Demand prenatal organically RT-PCR across and way proven increased major workflows. regions. solutions was solutions over breadth immunodiagnostics interest Reproductive capabilities wins. newborn led assays to posting

for at started first additional quarter, certain end reproductive we the as at in experienced built west. stocking of If of the health would and in the moving Normalizing have inventory second the as the U.S. in the stocking and customers our been impact products Europe Europe of end reproductive COVID-XX quarter, of health recall, quarter. you first U.S. the some flat the business

digits revenue organic organic biotech a to the by academic market, and Turning end driven up declined XX% Solutions, teens. Analytical in was revenue informatics, decline second low-single-digit By quarter. we Pharma lifesciences. Discovery government experienced declined high & strengthened in low-single

declines. business offset with approximately source to COVID experiencing pharma demand was markets as related major geographic all was nearly Applied professional shutdowns. regions due one Our flat by strong double-digit billable three XX% service declined declines lab enterprise services

teens, it shutdowns the XX% generally has to with the high China. delays. and dealt over our funding us within which trends due milling muted declined Pacific and and Americas safety our quarter, to environmental Food led Europe, Asia a cautious to customers rate adjusted grain throughout items, was by franchises below Order dairy approximately encouraging declined first Asia in to in flat and still were was bit interest second a this tax in of the here ongoing stay. momentum the Pacific Meanwhile, is more XX%. pacing food too consistent and was demand though sequentially velocity near the growth on term. net line is Shipping the and As second million. rebounded industrial expense quarter other to say quarter rebound $XX And in for whether early the our

and free adjusted the of million. finished We of adjusted Free flow an We the sheet. balance billion cash. XX%. the and was debt quarter $X million approximately cash $XXX million achieved cash free was to Turning with of cash flow $XXX flow $XXX in conversion quarter

the including performance, ratio books turn times down X% of a XXXX. net on exited up of over free with in growth. Closing first flow year. XXXX, the of are XX% the adjusted per the earnings was X.X the flow approximately Adjusted since we beginning XX%, EBITDA adjusted cash share we our quarter from the first adjusted debt with free Finally, conversion half to extremely pleased of growth organic cash XXX% XX% and growth, half X.X

We function progress as are DSO well our demand. in with terms encouraged as process associated our by accounts has the start due Reduction the related year-to-date COVID been improvements year. favorable more to a of to receivable

capital we Additionally, consciously in inventory start invested to XXXX.

back as the increased inventory levels higher should that year. the of We we COVID our transitioned and expect support to the non-COVID half backlog,

the three range free remained next flow As our adjusted steadfastly to cash conversion the on I call, to two mentioned committed to XX% XX% returning years. over first we our quarter to

team be not prouder For difficult And first doubt and these times. executed of I of one how be will the together come half no XXXX many PerkinElmer the could has during again, reasons, remember. to

to are to that updated items We for X% impact I half an view transition now of COVID on the want scenarios. less exchange the XXXX. back we modeling dependent foreign year, anticipate headwind on provide As

$XX $XX other adjusted For approximately average XX% interest for expenses. in million below the in A million the year. anticipate and line items, we rate XXX our share of million to tax count

tax assuming rate with our rates. of that are guidance, We as areas mix the previous will jurisdictional of tax higher from profits a now end higher come expect we at greater

exchange. quarter organic third $XXX million XX% million to Embedded reported to Turning including we the in foreign of impact are is representing to forecasting this demand non-COVID $XXX negligible lines. an of organic for related to guidance the million $XXX XX% of our million, partially to product offsetting X% organic from growth, representing a drop XX% growth, revenue revenue revenue XXXX, to COVID approximately $XXX of X% XX%

terms share guidance range a In forecasting are per we of of earnings $X.XX. the $X.XX to for adjusted quarter,

of second propels of All in energy earnings PerkinElmer throughout to proud this detailed am of the quarter purpose our the pervades better. second page be us to that is closing, last extremely In organization do our part family, all I to and presentation. the

we are the doubt like strong even we While from for day. more fruitful call we will upcoming time, improving all I Operator, would foundation, are that our to be a to this at open operating every no the stakeholders’. have years questions.

Operator

Thank Instructions] Vijay comes you. with Evercore. question [Operator first from Our Kumar

with proceed may question. your You

Vijay Kumar

of suggest I your taking a quarter question, ranges peers would have XX% one, base questions, XX%. down XQ think Thanks congrats and base since the minus business that on the Maybe is in business the commentary midst I The are XXXX that from my and minus the non-COVID The revenue best a for was and guys came Jamey. here. to X% improving. base, guide, XQ think execution terrific I two wow, pandemic, and

it's COVID million at about XQ assumptions XQ. curious $XXX COVID high it XX% the on curious particularly I'm minus to that around on that’s X% $XXX just on I'm sustainable in the especially end. diagnostics. to million, in the seems the is revenue So

Jamey Mock

Thanks for question. for Great. Vijay the

obviously First volatile a off, environment. it's very

our last and the three at looking looked So but and weeks trends COVID with the pretty first months, a we've July. ranges. pandemic Looked of backlog could swing non-COVID over put this of three both including time at into comfortable and our the revenues, the feel both lot at

address So the non-COVID piece. I'll

talked there we to it's side is something XX% scenario in second we were lumpy. recurring a through backlog some minus did prudent setback. the could in grow scenario see trends, while consumables more think where So a bit services the happens But that the the – quarter. timeframe, quarter, last we up-ticking this on DAS. positive just in be and particularly this similar and But a quarter, And where there's instruments

I we while think So minus we if would quarter. range through quarter of the get the And worse X%. trends second the than we the continue, and trends continue see end low to is improving so, did no think to our the do

On just to $XXX the COVID million, adjusted side, the $XXX the that's serology. $XXX basically inside million for million,

for in to quarter. million, So as we're I mentioned third remarks, serology in $XX the under was, $XX little that my a million prepared be over planning and

million. a high of is timing as And end, to but we but and difference to million our of be solely discussions you million between then the to midst ramp we And and would serology. opportunity so and and could $XXX continue. of in get our they at happen when PCR the those end the $XXX you get the RNA the $XXX those the if high tests the do look we of confident will backlog is and that of we're commercial lot feel show influx, shipments still coming, extraction today And commitments

that's we so And derive the around COVID revenue. range how

Vijay Kumar

Prahlad, And prepared your couple helpful, made, for thinking in a comments, one trends then That's of Prahlad, a you of Jamey. remarks. about sustainability

on I think a this think about whether given has of lines new have done think I Perhaps, for acid doors, of you test? the combo liquid plus address the flu test. also could handling. And opportunity COVID just or we pricing tender terms curious along extraction, of mentioned Thanks. amount going just you any nucleic you are you placements implications the in for wins forward. combo something that opening I'm mentioned relationships guys how

Prahlad Singh

Thanks, Vijay.

base has of extraction bodes the obviously the the through is way that and that increased think think what really I COVID I the the I other also has coming been this question to installed well year and the non-COVID others. and first that related number around Both that diseases assays infectious for address significantly good are kits would pipeline.

So attraction RNA high and benefits what versus our term ways we immune test. response customers as magnetic-based regards has that human that I under at of see system provide. I extraction come others labs, flu of to cetera, for can think the second competitively the And and will, two a quite that The using in is the in throughput or us what we are lot Vijay, and insights. get provide out test, Especially, in and workflow the the pack it the seeing be could that or direct longer in be a COVID. the run. kits is one question and testing, regards solutions look I do et parts. from at the think, pipeline been to around solutions long And and around would it sort a your beneficial pooling around test way vital flu I to either demarcate we antigen One a look is deduction immune that how measure direct would

indirectly. to can disease And of also has and So pricing, focus in been. our we of the sort to is focus I too the on ways our many then as that's whilst put directly, where opine early think that that terms detecting

Vijay Kumar

Congrats understood. in again, queue. I step guys, I'll back the

Operator

you. Thank

Willoughby Cleveland Steve Research. from from next question comes Our

proceed question. your You may with

Steve Willoughby

of just test you Obviously, test more sort than back follow-up. on Jamey, call, things couple Prahlad, days quick PCR one then how PCR maybe Prahlad A shifting a are you, what it the for when for maybe color maybe I demand seems thinking quarter. XX look Can I the third you sustainability know XQ about And beyond are you we ago, expected. have in guys it to what out on secondly, came downplayed your PCR demand we changed, the a even as then of like your PCR, it or thanks. the better on Hi, bit much opportunity demand. questions look within And little PCR. relates test? in quickly, provide first

Prahlad Singh

Sure, Steve.

on focus when serology we the talk along direct think will evolutionary. that's backed the it? with we, testing a others, still that when spike was large more still the in And maybe to science was wires I was or we're came out, was XX we important? hey, I very the serology about, days, look figure trying want there think, this to And do on And very testing demand it, tell the And it played expect vital but a vital think and work. to that and sort but we that quickly in we short the and be the direct look testing just of get what sustained to responses us Steve, direct would for immune of people long that least year-end expect I the to back not XQ, it. at at role,

going soon. anytime to So think go is testing direct I away don't

Jamey Mock

we the time time. that at call, not add yet Steve. of just our would any remember, PCR At had last shipments made two I of things,

were we at So time. having issues the import some

And is our question, still then confidence the having is, amount in that second ship to thing I think terrific. So I able say. be was workflow to would the

capabilities RNA very extraction and PCR combine with handling, So think I in well liquid marketplace. you that's resonated technology when our the

Steve Willoughby

say to for XQ million up were million? if to the it so guidance of So it you now COVID it assuming PCR $XXX that makes call that, test Are for, $XXX only you the or million seems out did, Jamey, $XXX with shipping then, as million PCR we like in a relates revenue, two the quarter close the to test let's $XXX let's of and months tailwinds.

Jamey Mock

serology serology, question Yes, a that's believe. right. be obviously, I for so, We that’s in mean, in was little and time is place which I future. over mention going Vijay's see. to $XX that We'll would try to the million, is

let's extraction as a that the and million $XXX less of which So technology, $XXX taken more demand, you we million. total, say PCR down than $XXX million was, much and to million therefore RNA said, portion $XX to have is therefore bigger the

Steve Willoughby

you. Got

in quick you, your you – nuance And China? demand just, how or in your are the back any end half what are overall of outlook other had year? thinking China Thank markets in the I follow-up, different what's there's between The is if about guys.

Jamey Mock

Yes.

So China for us. sequentially improves

the XX% get So And the it fact, XX% built over in would the to about a DAS hoped didn’t was point and quarter well. quarter. as in actually down flat second one down little first get at in flat and the here. in that quarter backlog we it had

So XX% XX% in though roughly good feel down diagnostics down quarter. went about we that the from in

of comfortable but people we're June level a I at in that It's think, second hospitals returned hasn't and still whether outbreak cetera. with in et that happened, Beijing normal. not not going still clinics, XXX% to utilization having and that's to the levels the the at

look soon the we to third whole the planning as again, on get quarter, but as hoping here, in So to we're low-double third overall for digits possible quarter that'll in China. as high-single and down is a perhaps we're forward what digits flat as

again, challenged, current to back is now, if currently it it's a a we our bit, we're range. going the still it diagnostics that's the But probably little So bit as what gets to that'll on. flats, see be uptake upside to but right way planning

Steve Willoughby

very much. Thanks Okay.

Operator

Thank you.

comes with question Derik from next America. of Our Bank DeBruin

question. your with proceed may You

Derik DeBruin

took Steve China So just my question.

go here. one to you now So the to got to I got think, second

little businesses them. things like some the and of getting guidance you And going this these – bit does flow the can talking sort of, talk sort crisis. to think eat I about cash free cash back what what post to what to impact about the to get programs of just that questions are in tailwinds? of asking to want margins, “go normal”, and one I you to big of you up. the you look to back level need opening also you picked about? opine for XX% sort to all is having things back flow how margins, comments When the I XX% just things to do these the we're And a see do get to So your overall accelerated sort were COVID as on, do free

Jamey Mock

Sure.

to you flow. and cash So talk both want free margins

we top that EUROIMMUN, the we been DAS we all OpEx unprecedented an it's obviously, leverage. on and already had, on and programs had we product had margins, largely mix that, volume had, So of growth we as and services quarter great great in had, working strong productivity

even And so still it leverage. was OpEx up, a was though good our

of long-term happen, operating high-XXs to some was when terms PerkinElmer an do quarter thesis that sustainability ability I expansion margin get to mid-XXs efficient. becoming certainly those more have this supports overall think term, of in but will think of think the the in things I I of I business. mean, So for to the short remain. that But the we this unprecedented we're margin it

are place. in programs productivity put being think I the

volume changing I think our mix is time. over and

can it's short snap to in difficult business it to But long-term, back say, completely what the think what the would be. So is term. proving I the this very

free our in again in quarters, of it pertains our to had things and a of As best cash time. best there. is, certainly, we first a flow, And that half one long couple there's

we of also in Our improvements receivables I process a will been as to here even with as over talking on. we've making time, a environment. But COVID benefit about, happen small to we're – continue a think, did normalized progress regards receivable But have you when we've terms. know lot been

probably bit ready than It's backlog the a to our half, levels, little COVID You that the time, to that always think that can invested has in in ready, his have turnaround And product our product for it's customers having us and other think prepared more when is non-COVID we we enabling increased. And customers Prahlad the And tracking immediately. our but normal significant that first about amount half built. are of that demand which be I remarks due the we then see a mentioned we need most inventory. half inventory.

come the half inventory So our levels should will down. that substantially think second I do

XX% we And we're just but yes, be And we to to progress what it. if saying, on inventory I years. XX% a demand, still, think we're we that our that lot There's a customer's on that's can tracking. XX% focused And couple it of to great. manage confident I range right on get so, underlying before feel high that XX% to required that, our ability is happens in to now think SIOP. and meet were It receivables, good Derik, our here is happens we're of so that our to

Derik DeBruin

with test. this curious historically it. strategy, more in you you because then or one focused like haven't just I'm just you follow-up, Are those for your EUA allies I'm standpoint a to of following approved curious just And is care in authorization the from disease market as those, China. some up sort some term looking longer and in and sort FDA of the Great. an of antigen if done things on mentioned eventually point going shift. of infectious with in at going sort FDA of the an more U.S.,

Prahlad Singh

Yes.

that I specific we COVID continue actively to think investigate detection a method. direct, as

I think or quality should we key that a for that I very not threshold. us, that. test, the of in are that somewhere test meet the mean, low-XXs release our would And at important the around it's

COVID. we we it the test specific we sensitivity it got then have to which a would So relative has that expect be, would to right if release

we in that U.S. I test is of think longer, will we a TBD. strategy care point have the

Derik DeBruin

you. Thank Great.

Operator

you. Thank

Peterson question next comes Our JPMorgan. from Tycho with

You may proceed with your question.

Tycho Peterson

in Jamey, you gross response on up you of Derik's was comment? cutting accretion versus quantify clarification XQ? margin didn't that a testing just measures I how hear cost much to the your the Can COVID Hey, question. step quantify the for the

Jamey Mock

Yes.

So Tycho. overall mix,

about XX% mix say XXX So points, would we to grew gross and XX% up that. basis margins made I of

that but total, to related, programs. the a made was of So that increase. margin expanded in certainly XX% XX basis gross our probably in mix on total, points, impact, and just it XX% not mixed, productivity we to But even, has XX COVID by up

Tycho Peterson

an outlook, taking even just get can just recovery, a and bit might example, more sequential a academic little pitching XQ what market? It's end in more non-COVID And on on a you based very for the the little It helpful. be business, improvement. big, color for you're by then color

Jamey Mock

sure. Yes,

think which down I'll minus in was down to XX% range a then to markets XX% range. level, the X% X% obviously XX% second of the and DAS, XX%, we XX% quarter range. in was which minus And XX% to ex-COVID a high total at the diagnostics, have a in in in I So talk about some

there. just So underneath some end the hit let me markets of

digits. I is little kind I it down that prenatal tick think not China was mentioned to we bit, a single health, planning when a on reproductive digits, utilization at mid-single normalization. yet up XXX% particularly of think So continues we're on so downloads

So and strong was go rose and the low I quarter, discovery that seeing and we're of don't consumables think coming by reproductive I buoyed and health. little as discovery digits. that's will double of digits, comfortable into flattish enterprise down but more of uptick DAS was as just our to backlog second expect function labs Slipping be back Immunodiagnostics digits feel and double up. informatics pick informatics probably the when anticipate applied And tenders, in has Enterprise digits, as remain I the it'll that's we whatnot. But hospitals we kind people side, were well think single some and life sciences, there. we the physicians business a to see genomics business down of single In a the bit down was and which our high low returned. think business. down. strong,

of that picking level. range to start again, XX% and up. but Applied range, move way single obviously had to it for backlog back this we down I XX% COVID. we expecting end DS remains downloads XX% kind is. X%. at our still think, pick X% was I on and our are looking it high up, the of Again, that, So but think down be digits high upload range, would in a And, would is low that single down But on from which and the to XX% of we of bit the to the digits. that expect double food, but growth, excluding DAS down is expect to at markets lifetime our digits, We even a is of end simplest end to for

Tycho Peterson

helpful. for Prahlad just Okay. test. one And then on That's the antigen

I into technology, the of you market. assume about talk uses lower lateral mentioned can the come that seen of a the antigen thought process lot but there, flow tests some quality we've You just

term. and PCR testing versus So longer curious, entering about just role how I'm antigen think why of you're Thanks. you the

Prahlad Singh

on not Yes, if threshold. portfolio, evaluating are Tycho, rest sites and we But And across different where the there, capabilities we to, from would focus it to launch going investigated in that We've Europe like aspect China I'm one the There we it saying on and saying is right. – have and too. us only while this quality would for been met we it thanks. every develop capabilities from Tulip competencies just that are leverage is the we that absolutely, got our actively are able product you're of are companies. and I'm our our

So we would be leveraging.

we the end. event get be would high So and it levels we come in sensitivity specificity at only the out, would if the

Tycho Peterson

Okay. Thank you.

Operator

Thank you.

with question next Stifel. from Our Dan comes Arias

with You question. may your proceed

Dan Arias

Afternoon, on your franchise what’s can level guys. But in Obviously Thanks. sort side. expectations study XXXX thing? selling and at environment that you it’s up sort Or Maybe just this is best of just on of out? ahead and right for thinking Vanadis it of health still on Europe? infants now. show that going set then then have of a of the us reproductive just the tough a all does shaking where Is as end data that the think with value the there, women can to year? And

Prahlad Singh

Yes.

So funnel delays. itself is right resulted and thanks, well. funnel has the Dan. obviously continues to The in stronger program continues it be very The installation now. are us stronger, being generally progress Vanadis as installations a up held to COVID for The

seen. But installations will that are be anywhere in will installations I QX to open projected. place, of will up the we as I think are we the both of terms of XXXX very expect say would tests, market be QX up. XX is us, able pick getting the the In pipeline as And the have publishing hopeful But et cetera. is that to say, smoothly. that restrictions, it and in for travel demand open up installations we I loosen high. to the and we COVID up run don’t fill shift The starts the freeze had study that regions to in as that think terms I we in challenge to the terms they in or continue – and

Dan Arias

And just to Thanks. going on serology. COVID Okay. maybe back

to be able side things And maybe maybe For ELISA your provide you’re of then are adopted some what that that of pretty information larger high that diagnostics to bundle you’re PCR the a other in antibodies. have on on can about sounds competitors, generating your obviously serology to you extent at of the tests? lot the least neutralizing like thinking the European test, it’s then data suggests some And that It used on the since demand. working assay with just commercialization, strategy.

that’s something volume just to whether use you’re able drive to curious there. So

Prahlad Singh

our Dan, I of I To said first understanding think, the evolving of serology, case question, your the is as in Yes. science, every day. earlier,

broader come in think were larger crystal to the around we studies to I serology insights for play, immune and say vaccines that’s ball, look response. it a I play testing. serology expect of into will epidemiology a continue And it I drive role. as better would the if understanding where And to provide will that a immune

with mean, Quest, we’ve both testing. put examples together, are Sonora done where terms PCR and able us you I serology as there to being saw it In of

would say larger it basis. is that customer I So

traction solutions, around our seeing are around kits, extraction whether PCR it’s devices or total serology. collection We or

to is to think continues be challenge some back taken virus and the serology on the that I seat most of is direct focus as now of detection. a extent

Dan Arias

it. Got

much. Okay. very Thanks

Operator

Thank you.

Schulte question with next comes from Baird. Our Catherine

may proceed question. your You with

Catherine Schulte

questions. the for much so Thanks Great.

on First, extraction can move capacity rest walk are you serology of just today? your through what of us neurology capacity from expanding where are the and as terms PCR you year? plans standpoint in manufacturing we further through the And a the kits

Prahlad Singh

Yes.

the manufacturing terms and previously our in what of of have our So we in we are capacity. scalable all disseminated multiples highly cases

whether Asia, very Europe of world, or benefit where place. a North the parts and having in think is put this also in all to capabilities – footprint supply of of the comes geographic the it’s breadth our strong We’ve I in America bear. broad redundancies three

country So dependent supply we or any not suppliers, a constraint. sole cetera, point, feel et to this or are any a At of particular we be on do sort region. not

in about we’ve can as our – probably website you times as terms – talked to of provide fact, on time capability you it’s and live track turnaround earlier, customers. In live our to we streaming our put turnaround

Catherine Schulte

then, great. you’re maybe business. that terms thought drop pretty in about incremental process strategic think margins to accelerate as of And your this getting incredible we using COVID investments? What’s letting testing on through – versus some Okay, that

Jamey Mock

to Yes. Catherine, I think we biased invest. are

or the you spending because, And levels et in choice. a second can’t the quarter some you can’t cetera. at actually half travel level It’s of first third-party so are by levels not get service, the a

second digital So we of the to the in we as we like R&D, are with going so as investments look year, I investment additional There’s the of people. think step some pockets some half into information well, organization technology. areas invest up our want where to

than invest been. spend will continue a we and we think I have more bit little probably to So

our so. guiding always But enough a of think course, and the one to in business fortunate to on we’re think able company. from And the as stronger has I outlook. I we been Of this to principles monitor reinvest be back we’ll doing emerge plan

Prahlad Singh

the half R&D, of bench. was whether year think, travel scientists first did of around want because make And to or I couldn’t especially just Catherine, to the that we investments restrictions come it of in the to the some we availability of

we where invest and – talking will that I we pipeline that’s definitely are to and given the So think the that pipeline NPI incrementally. about, continue

Catherine Schulte

And U.S. like never COVID U.S. much perspective tailwinds this. you around comment stronger was after me, the subside, as in we we to back been maybe its those a from company emerge a and EUROIMMUN about think grow presence. last If seems strategic part would step the on really Okay. had stronger of to if from position it you once a acquisition Jamey’s one how opportunity than adoption should COVID have rationale And be emerging the happened. and going back just for

the portfolio just can adoption of U.S. been any COVID of an So you is about help has think accelerator how longer-term? us terms there of in much way that

Prahlad Singh

One, look the the it of are in three Catherine, it, So terms right? at ways relationships. look at to there way I would

establishing those such institutions, large with So significantly we the relationships become or at labs. it’s are Mayo has that stronger, as whether with emerging reference that customers

what’s significantly the into allowed I and future. peek and that of the second it that aspects doing with has aspect the available been the relationships are to our current And that has familiarization leverage improved. in coming think the is to has also science commercially pipeline work the EUROIMMUN, team products of us a the into with Lübeck flow provide also

Axentis around of of from of random for EUROIMMUN with about be given talked right? out – is some COVID what earlier, COVID end year that XXXX the The lower platform the much our or be your we’ve going that to access given early by done We’re hopefully the our As customers. that adoption would adoption we have restraints. barrier getting

whole. way one sort extent that’s quantify of provides to longer-term to to some COVID a So, benefit the as the as to of what company

Catherine Schulte

Great. Thank you.

Operator

you. Thank

Steve next Our with from question comes Beuchaw Wolfe Research.

You may your proceed with question.

Steve Beuchaw

discovery for out here. thanks of serology, And queue. in vaccine to ask there might necessarily on of clinical trials at Jamey, in Hi, that some good clear has be so look there’s Prahlad, savings. extent call. me not to that? four to bit vaccine I of is or And earlier attention focus Prahlad Q&A even more really trajectory three the types makes afternoon and view? for out, a seems seen all the relative is, one we’ve on much Could some on studies, there’s demand months of if we’ve the to the maybe and of little next of seven we in of help and trials, jump The some sense it’s for like far, cost is you one like, margin been mid-XXs, reactivity five But I assessments. assays like margins, clinical learnings it had of some And the that you. But or clinical one time. those and within for what appreciate can I’ll time thought ask community. more just with longer-term structural here. Thank gained four T years, Jamey, just that’s back to amount on the we outside path cells there this But imagine T broader, outside to sorry is in clinical you for and would lot for higher margins ago? this a years, then which the or speak you then been what of cell some the it data company the of have that you reflect call the trial on or speak that experience least can the or for a the to go flagged how demand. whether a which think you eight

Prahlad Singh

Yes.

Let one easier then me with start Jamey can and the take.

little early around I cell think I think tell T too opinion. – aspect T Steve, cell a my the the it’s to response, in

that be it what to way and on would are to innate to look germane at going immune focus insights think to aspects at. I we humoral of have how to is it. But think sort need more of avenues look what we it’s important one to look where and are as that’s response, the and total do or the response trying whether to at

TBD yet something come. I think or So it’s to

Jamey Mock

that’s lot Obviously, give mentioned, Day. is Yes, as come when to an years. to difficult what as we learnings. for said, out we our with margin the margins, Steve, years. And target of had launch were it’s three we you for in And here our have next to the Analyst hoping three four exact we’d outlook a in

much in say and I in expansion confident expansion and food number, what But even think all I’d I exact margin the business in So is creation would that say, we’ve matter. more without opportunity. prepared there how value remarks, an I for spent mentioned margin substantial. segments giving my the our time analytical opportunity we’re

actions, certainly it MPI skew play, rationalization. think we’re procurement, but is doing our course what doing I we’re over to of a what five-year short-term three with with cadence, the some

it I substantial. rather will think be

don’t approach. did anything think would confident But And mention point. we’re and this to here, even that mid-XXs I maybe again, up to at still for in more we in learning sign I we that’s but want are four say years. So, three I

Steve Beuchaw

color appreciate all Really Have much. great Okay. the Thanks so night. there. a

Operator

Thank you.

question comes Cowen. Schenkel with from Our next Doug

You may question. your proceed with

Doug Schenkel

for Thanks taking afternoon. Good my guys. Hey questions.

quick of couple a Just ones.

sequential investment operating bit about The talked sequentially, cleanup just decline of basis reflection you quarter It to XXX despite change about. points, a I’m it’s provide of some drives a opportunistic initiatives guidance appears to this? margin is long-term the that guessing as you revenue your first a implies expect and what question. mix third numbers. and more similar guidance detail Could that on a you of growth combination XXX in

Jamey Mock

It down about and that nailed. was prior that. come You I margin is sequentially basis XXX I to about think quarter. expect half versus And would line gross And the non-COVID mostly the both COVID. mixed, points

So a a COVID the point. to and little book book at little midpoint coming the bit coming non-COVID down your the back up

through question emerge everything invest Catherine’s sub as comes the line. other here. in through quarter, right, And to of digital, to half quarter continuing this investments the third mix mentioned R&D, down incremental comes and stronger little then margin with people a in in and versus the you’re business well I terms As less probably half second the so informatics some of gross

Doug Schenkel

helpful. Super Okay.

be second on this a think is just moving The Prahlad a one question. to PCR revenue assumptions forward. willing bit more is, detail provide your to and I’m I

produces The season. diagnostic wrap to produce produces PCR they’re next meaningfully expected who are driving system non-automated what one the peers Specifically is, also kits, here per thinking of million by XX to automated I’m – vendors week. well, about manufacturing your tests flu

many share? as to sell your going you you you just in to share? share those could simple this time. you’re how to a future? if with bit examples little the as maintain just Are for gain you you expect just Do expecting just mind, over can evolve to expect on revenue is wondering I’m produce foreseeable really as So Or two more as,

Prahlad Singh

it Yes, Doug. way, I this let – put think me

coming where workflow customers greater extraction we validated we As progress And solutions are where we we collection units, because capacity extraction are the with think us PCR provide back feel that that solution that’s think with to and we testing. we well antigen benefit the very very some from fully realizing we pleased And about our they I see demand customers. sustained that’s as competitors, are, and bring that And seeing to aren’t is we workflows. what realize now, we direct I of demand. media, kits, of the our good because that our full a than are that we from feel

Doug Schenkel

you. Thank Great.

Prahlad Singh

Yes.

Operator

Thank you.

Dan from comes Brennan UBS. question next with Our

proceed your may question. You

Dan Brennan

Great. the congrats Thanks and for taking that. Thanks for questions the quarter. on

wondering you Just if handling, could of robotic a kind on insight share the market. liquid the little

dove diligence you’re in much information. too because, leader and there’s haven’t it’s We not but much a harder obviously there to there, as

color opportunity just little in of quarter color instrument us going forward of how and the we kind maybe, the that any kind market, give placements So size on for on a think of COVID. about

Prahlad Singh

know product down And our ongoing automation. has you It specifically particularly around demand don’t if have the seen been line of strong the lot I it JANUS be product quarter. break and especially continues lines has strong. a to demand to second in

Jamey Mock

The Xx only liquid year-over-year in up thing was we it said, that Dan handling. was here

Dan Brennan

on that But think the action. much how about million so Xx, kind I some implicit that like and know how in color handling gave I much PCR More kind you of color of quarter. was how $XXX on mean million or do of liquid Jamey we the of… in that

Jamey Mock

Okay.

to through and think here of get exact we’re into walk and to be whatnot. not trying Dan, be able numbers I to off

lines opportunity think together. well, doing everybody and our all diagnostics the franchise doing selling focused I product is the like we’d that keep overall so is that So to of across well

Dan Brennan

Got it.

pricing any sticking to share you as of kind a you then all the color of us automated Doug don’t extraction Could it’s Obviously, you. in on the and teens. players lot of if in kind are ones, your out PCR give really about since insight you the also branded any And hard share OUS, but for related mind. and a the a there, U.S. with businesses. of Any players revenue market? mentioned, less into us contribution matters. then Thank And XXs, PCR just are back can at other pricing couple in Okay. on maybe COVID of the just terms help maybe there’s mix capacity

Prahlad Singh

RT-PCR consistent. detail to serology, some not we and been happy extraction want pricing I decline share. I’m level remains There And that our of that the feel you has tell modest, we in think us. that’s but it’s to for

whole market away But specific think the from we I to pricing. think serology I has getting want seen a into stay decline.

Dan Brennan

along Or it other? geographic terms kind in OUS your is or market the And one just follow more of having in success split? U.S., of you

Prahlad Singh

in success I both Europe U.S., Asia. both in think we are OUS in markets, also seeing the and

countries across penetration we So continents. in all seeing a are broad

Dan Brennan

Great.

you right. Okay. All Thank much. very

Jamey Mock

Dan. Thanks,

Operator

I would back now to you. Prahlad remarks. Thank for like the Singh over call closing any turn to

Prahlad Singh

together. everyone I’m your for how you our rallied has entire proud and questions. of Thank organization Again,

Our breadth to of puts in help us position this unique a combat pandemic. capabilities

We are is focused third you forward updates quarter I I supporting resonating. company. providing call. science, clearly as on look PerkinElmer. you. with doubt, an further Thank Thank to that on this our stronger And for have and even earnings crisis leading no from we emerge

Operator

today’s concludes for you ladies and participating. conference Thank you, gentlemen. call. Thank This

may You now disconnect.

Revvity (RVTY) 28 Jul 202020 Q2 Earnings call transcript