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PerkinElmer Beats in 4Q, Posts Loss

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PerkinElmer (PKI - Free Report) reported fourth-quarter and fiscal 2011 adjusted (excluding one-time expenses) earnings per share of 62 cents and $1.83, respectively, exceeding the corresponding Zacks Consensus Estimate of 51 cents and $1.68 as well as year-ago earnings per share of 45 cents and $1.36, respectively.

Net loss from continuing operations was $84.2 million, or 75 cents per share in the fourth quarter versus net income of $43.1 million, or 37 per share in the prior-year quarter. The results for the reported quarter include two major non cash charges. The first charge relates mainly to benefit plan liabilities of divested operations and the second relates to one-time tax charges on account of the Caliper acquisition. 


Revenues from continuing operations stood at $540.2 million in the reported quarter, up 15% year over year, beating the Zacks Consensus Estimate of $537 million. The corresponding figure for fiscal 2011 was $1,921 million, an increase of 12.7%, missing the Zacks Consensus Estimate of $1,937 million.

Segment-wise Revenue

Sales from the Human Health segment stood at $258.5 million, up 20% (up 5% on an organic basis) year over year.  Revenues from the Environmental Health segment amounted to $281.7 million, up 11% (up 7% on an organic basis).  


Adjusted gross margin was 49.9% in the fourth quarter, higher than 46.9% in the prior-year quarter. Adjusted operating margin was 18.5%, up 250 basis points on a year-over- year basis.  

Adjusted operating margin at the Human Health segment was 22.8%, up 350 basis points year over year. Adjusted operating margin at the Environmental Health segment was 18.8%, up 320 bps from the year-ago quarter.

Balance Sheet

Cash and cash equivalents amounted to $142.3 million as of January 2, 2012, down 66.1% year over year. Long-term debt, excluding minor short-term borrowings, was $944.9 million, up 123%.


The company forecasts adjusted earnings per share for fiscal 2012 in the range of $1.98 to $2.04. Reported earnings per share from continuing operations are forecast in the range of $1.22 to $1.28. Organic revenue is expected to increase in the mid-single digits.

PerkinElmer has established itself as a market leader, particularly in the genetic screening segment, and holds one of top two market share positions in several important subsets of the life sciences technology and genetic screening businesses.

The company continues to execute well across all its product lines aided by rebounding markets and cost containment efforts. PerkinElmer’s transfer of select manufacturing to China has expanded its operating margins. The company has increased its productivity and improved product mix in favor of higher value added products, resulting in higher operating margins.

PerkinElmer, however, operates in a highly competitive industry characterized by rapid technological change and evolving industry standards. As a result, the company must make large investments in R&D in order to retain a competitive pipeline. PerkinElmer competes with Thermo Fisher Scientific (TMO - Free Report) among others.

PerkinElmer's exposure to poor end market visibility might result in a relatively unattractive risk-reward trade-off for the stock. Our Neutral recommendation is supported by a short-term Zacks #3 Rank (Hold).

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