PerkinElmer Earnings Beat by a Penny

Zacks

PerkinElmer, Inc. (PKI) posted adjusted earnings per share (EPS) of 49 cents in the third quarter of 2013, exceeding the Zacks Consensus Estimate by a penny as well as the year-ago level of 45 cents by 8.9%. Reported figurers are impressive as they depict growth of 44% in EPS to 36 cents from 25 cents a year ago.

Revenues in the quarter inched up 2.9% to $524.3 million and were in line with the Zacks Consensus Estimate. Organic revenues rose 2% in the quarter. Adjusted revenues went up only 2% to $525.1 million while organic revenues grew 2% as well.

Adjusted operating income edged up 4.2% to $81.6 million from $78.3 million in the year-ago quarter. Adjusted operating profit margin increased 30 basis points to 15.5% from 15.2% a year ago.

Segment Results

Revenues from the Human Health segment went up 1.8% to $292.4 million while organic revenues were flat year-over-year. Adjusted operating income rose 4.0% to $65.6 million compared with $63.1 million in the same quarter a year ago. Adjusted operating margin increased 80 bps to 22.4% in the quarter.

Revenues from Environmental Health rose 4.3% to $231.9 million with a 4% increase in organic revenues. Adjusted operating income dipped marginally by 1.6% to $24.5 million from $24.9 million in the third quarter of 2012. Adjusted operating margin ebbed 60 bps to 10.6% compared with the year-ago level.

Financial Position

PerkinElmer had cash and cash equivalents of $132.3 million as of Sep 30, 2013, down from $171.4 million as of Dec 31, 2012. Total debt declined slightly to $935.9 million as of Sep 30, 2013 compared with $940.6 million as of Dec 31, 2012.

In the first nine months of 2013, cash flow from operating activities fell 23.6% to $87.0 million from $113.8 million in the same period of 2012, mainly driven by higher inventories. Adjusted operating cash flow rose 7.7% to $161.8 million from $150.3 million in the first nine months of 2012. Capital expenditure rose 30.0% to $31.6 million compared with $24.4 million a year ago.

2013 Outlook

PerkinElmer continues to expect organic revenue growth in the low-single digit range in the year compared with 2012. PKI narrowed its reported earnings per share guidance to $1.42–$1.45 from the earlier range of $1.40 to $1.47 and adjusted earnings per share to $2.04–$2.07 from $2.03 to $2.10. The current Zacks Consensus Estimate for 2013 is the upper-end of the new guidance.

Our Take

PerkinElmer, Inc. is a global technology company which provides products and systems to the telecom, medical, pharmaceutical, chemical, semiconductor and photographic markets. PKI has operations in over 100 countries, and is a component of the S&P 500 Index. Currently, it retains a Zacks Rank #3 (Hold).

While we remain on the sidelines about PKI, stock that is performing well in the scientific instruments industry include Mettler-Toledo International Inc. (MTD) with a Zacks Rank #2 (Buy). Due to lack of any other favorable stocks, we consider CryoLife, Inc. (CRY) and Natus Medical Inc. (BABY) from the medical instruments industry as worth to look for. Both of them carry a Zacks Rank #1 (Strong Buy).

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