PerkinElmer, Inc. Q2 2010 Earnings Call Transcript

PerkinElmer, Inc. Q2 2010 Earnings Call Transcript
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PerkinElmer, Inc., (PKI)

Q2 2010 Earnings Call

August 5, 2010 5:00 p.m. ET

Executives

Robert Friel – Chairman, Chief Executive Officer, and President

Frank “Andy” Wilson – Chief Financial Officer, Chief Accounting Officer and Sr. Vice President

David Francisco – Vice President of Investor Relations and Treasurer

Analysts

Ross Muken – Deutsche Bank

Quintin Lai – Robert W. Baird

Derik DeBruin – UBS

Jonathan Palmer – CLSA

Operator

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Good day ladies and gentlemen and welcome to the PerkinElmer 2010 Quarter 1 earnings conference call. My name is Jonathan and I’ll be your operator for today. At this time all participants are in a listen only mode. We will conduct a question and answer session a question and answer session towards the end of this conference. (Operator Instructions)

I’d now like to turn the call over to Mr. David Francisco.

David C. Francisco

Thank you. Good afternoon and welcome to the PerkinElmer first quarter 2010 earnings conference call. I’m Dave Francisco, Vice President of Investor Relations and Treasurer for PerkinElmer. 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 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 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 May 20, 2010.

Before we begin we need to 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 represents 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.

Robert F. Friel

Thank you, Dave. Good afternoon and thank you for joining us today. Let me begin by saying that we are pleased by our first quarter financial performance. We started the year strong and believe that we are very well positioned strategically in attractive end markets and innovative technologies.

Our results on the top line exceeded our expectations, as many of the most challenged markets in the economic downturn returned to growth in the quarter. We are particularly pleased with these results given the difficult comparisons from the first quarter of 2009, including the impact of the extra selling days that we had in the first quarter last year.

Additionally we were able to significantly expand operating margins and generate strong growth in both adjusted earnings per share and cash flow. Amy will provide more details on the financial performance shortly. I would now like to share some of our first quarter highlights regarding progress on our key initiatives to increase the growth profile of the company and expand detection and prevention capabilities to advance human and environmental health.

Starting with human health, we recently announced our intent to acquire Signature Genomic deepening our commitment to the diagnostics market. Signature brings complimentary services to our existing diagnostics profile with cutting edge cytogenetic technology providing unmatched accuracy and comprehensive [vista] results.

In addition to complimenting our current business, Signature provides expansion opportunities in the diagnostic oncology with an offering that combines multiple key detection elements in a single assay. We launched our new backs-on-beads technology, a multi-plex diagnostic tool that can detect markers of multiple diseases from a single serum sample, to the European market this quarter with strong early receptivity resulting in key customer wins in large hospitals and labs.

Additionally we are piloting a new diagnostic technology program for detecting severe combined immunodeficiency disorder or SCIDS. A primary deficiency in the immune system that results in the onset of serious infections, even life threatening ones, within the first few months of life.

This pilot project for SCIDS screening provides significant opportunity going forward as it is expected to be the first edition to the next menu expansion of mandated newborn tests in U.S. markets.

In our research business we have seen continued strength from our region portfolio including increased demand for our AlphaWise technology due primarily to the migration to biologic-based drug discovery research.

We are finding that pre-clinical research laboratories are now standardizing their equipment around AlphaWise to aid in the detection of cardiovascular, cancer, diabetes, and neurological diseases.

In environmental health, we continue to address critical environmental health and consumer safety concerns with market driven innovation and response to increased global regulatory mandates and the identification of new contaminants.

In Asia [inaudible] regulatory enforcement has driven increased demand for environmental and food safety monitoring systems as this region migrates toward Western compliance standards. For instance, an effort to address food safety concerns in China, we are providing the government authority with more than 100 atomic absorption spectrometers for toxic-metal contamination testing.

In addition, we are seeing strong demand trends in other developing regions within Southeast Asia to impose the stricter quality [work] standards. In regard to our strategic initiative to expand our mass spec capabilities, I am pleased to report that we have finalized the purchase of the remaining interests of the joint venture.

Our continued commitment in innovation in this technology will provide our customers with solutions that support the analysis of component elements, trace elements, or contaminants in samples of interest leaning to improved products and applications to their end markets.

The new Nexion IC-PMS system recently launched at Pittcon advances this trace element analysis with three modes of operation within one instrument creating a highly efficient lab environment. Additionally we have partnered with Abbott in the area of pathogen detection through the incorporation of our time-of-flight Mas-Tec technology and Abbott’s Plex-ID Pathogen Detection system.

The Plex-ID system can rapidly and accurately identify pathogens, as well as alert health officials to new disease strains, help guard against bio terrorism, and help hospitals identify antibiotic resistant bacteria in their facilities.

In summary, we are pleased with our strong start to the year financially, as well as the progress made on our growth initiatives toward the advancement of human and environmental health. As mentioned, we are encouraged by the improving trends that we are seeing in our end markets as visibility slowly improves throughout our businesses.

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