Revvity, Inc 10-Q for FY2020 Q1

Revvity, Inc. (RVTY)

10-Q 2020-05-12 For: 2020-04-05

Added on April 10, 2026

About this 10-Q

Revvity, Inc filed this 10-Q on May 12, 2020, covering the quarter ended April 5, 2020 (FY2020 Q1).

Headline figures

Quarter ended April 5, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $652.4M; up 0.6% from $648.74M a year earlier
Net income: $33.67M; down 4.9% from net income of $35.41M a year earlier
Diluted EPS: $0.30; down 6.3% from $0.32 a year earlier

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Massachusetts			04-2052042
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

940 Winter Street,	Waltham,	Massachusetts	02451
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, $1 par value per share	PKI	The New York Stock Exchange
1.875% Notes due 2026	PKI 21A	The New York Stock Exchange
0.60% Notes due 2021	PKI 21B	The New York Stock Exchange



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐



		Page
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements	4
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
	Overview	31
	Critical Accounting Policies and Estimates	32
	Consolidated Results of Continuing Operations	32
	Reporting Segment Results of Continuing Operations	36
	Liquidity and Capital Resources	36
	Dividends	41
	Contractual Obligations	41
	Effects of Recently Adopted and Issued Accounting Pronouncements	41

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 6.	Exhibits	53

Signatures		54



	Three Months Ended
	April 5, 2020			March 31, 2019
	(In thousands, except per share data)
Product revenue	$	425,529		$	438,722
Service revenue	226,867			210,015
Total revenue	652,396			648,737
Cost of product revenue	206,190			206,276
Cost of service revenue	138,183			134,655
Total cost of revenue	344,373			340,931
Selling, general and administrative expenses	208,569			198,857
Research and development expenses	48,914			47,980
Restructuring and other costs, net	5,858			7,639
Operating income from continuing operations	44,682			53,330
Interest and other expense, net	9,993			16,565
Income from continuing operations before income taxes	34,689			36,765
Provision for income taxes	974			1,312
Income from continuing operations	33,715			35,453
Loss on disposition of discontinued operations before income taxes	—			—
Provision for income taxes on discontinued operations and dispositions	50			41
Loss from discontinued operations and dispositions	(50		)	(41		)
Net income	$	33,665		$	35,412
Basic earnings per share:
Income from continuing operations	$	0.30		$	0.32
Loss from discontinued operations and dispositions	(0.00		)	(0.00		)
Net income	$	0.30		$	0.32
Diluted earnings per share:
Income from continuing operations	$	0.30		$	0.32
Loss from discontinued operations and dispositions	(0.00		)	(0.00		)
Net income	$	0.30		$	0.32
Weighted average shares of common stock outstanding:
Basic	111,121			110,543
Diluted	111,644			111,293
Cash dividends declared per common share	$	0.07		$	0.07



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	April 5, 2020			December 29, 2019
	(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	195,146		$	191,877
Accounts receivable, net	626,150			725,184
Inventories	393,164			356,937
Other current assets	127,366			100,381
Total current assets	1,341,826			1,374,379
Property, plant and equipment:
At cost	703,266			701,580
Accumulated depreciation	(389,409		)	(383,357		)
Property, plant and equipment, net	313,857			318,223
Operating lease right-of-use assets	196,319			167,276
Intangible assets, net	1,200,288			1,283,286
Goodwill	3,051,694			3,111,227
Other assets, net	280,412			284,173
Total assets	$	6,384,396		$	6,538,564
Current liabilities:
Current portion of long-term debt	$	9,654		$	9,974
Accounts payable	233,227			235,855
Short-term accrued restructuring and other costs	11,298			11,559
Accrued expenses and other current liabilities	473,853			503,332
Current liabilities of discontinued operations	2,112			2,112
Total current liabilities	730,144			762,832
Long-term debt	2,010,525			2,064,041
Long-term liabilities	704,154			751,468
Operating lease liabilities	179,827			146,399
Total liabilities	3,624,650			3,724,740
Commitments and contingencies (see Note 18)
Stockholders’ equity:
Preferred stock—$1 par value per share, authorized 1,000,000 shares; none issued or outstanding	—			—
Common stock—$1 par value per share, authorized 300,000,000 shares; issued and outstanding 111,306,000 shares and 111,140,000 shares at April 5, 2020 and December 29, 2019, respectively	111,306			111,140
Capital in excess of par value	90,236			90,357
Retained earnings	2,836,531			2,811,973
Accumulated other comprehensive loss	(278,327		)	(199,646		)
Total stockholders’ equity	2,759,746			2,813,824
Total liabilities and stockholders’ equity	$	6,384,396		$	6,538,564



	For the Three-Month Period Ended April 5, 2020
	Common Stock Amount			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	(In thousands)
Balance, December 29, 2019	$	111,140		$	90,357		$	2,811,973		$	(199,646	)	$	2,813,824
Impact of adopting ASU 2016-13 (see Note 1)	—			—			(1,328		)	—			(1,328		)
Net income	—			—			33,665			—			33,665
Other comprehensive loss	—			—			—			(78,681		)	(78,681		)
Dividends	—			—			(7,779		)	—			(7,779		)
Exercise of employee stock options and related income tax benefits	21			1,085			—			—			1,106
Issuance of common stock for employee stock purchase plans	14			1,242			—			—			1,256
Purchases of common stock	(66		)	(6,276		)	—			—			(6,342		)
Issuance of common stock for long-term incentive program	197			2,831			—			—			3,028
Stock compensation	—			997			—			—			997
Balance, April 5, 2020	$	111,306		$	90,236		$	2,836,531		$	(278,327	)	$	2,759,746



	For the Three-Month Period Ended March 31, 2019
	Common Stock Amount			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	(In thousands)
Balance, December 30, 2018	$	110,597		$	48,772		$	2,602,067		$	(176,481	)	$	2,584,955
Impact of adopting ASU 2016-02	—			—			13,289			—			13,289
Net income	—			—			35,412			—			35,412
Other comprehensive income	—			—			—			2,946			2,946
Dividends	—			—			(7,742		)	—			(7,742		)
Exercise of employee stock options and related income tax benefits	186			8,424			—			—			8,610
Issuance of common stock for employee stock purchase plans	19			1,367			—			—			1,386
Purchases of common stock	(57		)	(5,236		)	—			—			(5,293		)
Issuance of common stock for long-term incentive program	146			3,392			—			—			3,538
Stock compensation	—			1,371			—			—			1,371
Balance, March 31, 2019	$	110,891		$	58,090		$	2,643,026		$	(173,535	)	$	2,638,472



	Reportable Segments
	Three Months Ended
	April 5, 2020						March 31, 2019
	Discovery & Analytical Solutions		Diagnostics		Total		Discovery & Analytical Solutions		Diagnostics		Total
	(In thousands)
Primary geographical markets
Americas	$	169,116	$	105,157	$	274,273	$	162,417	$	98,008	$	260,425
Europe	118,657		81,599		200,256		107,606		65,858		173,464
Asia	110,622		67,245		177,867		118,810		96,038		214,848
	$	398,395	$	254,001	$	652,396	$	388,833	$	259,904	$	648,737

Primary end-markets
Diagnostics	$	—	$	254,001	$	254,001	$	—	$	259,904	$	259,904
Life sciences	245,733		—		245,733		217,377		—		217,377
Applied markets	152,662		—		152,662		171,456		—		171,456
	$	398,395	$	254,001	$	652,396	$	388,833	$	259,904	$	648,737

Timing of revenue recognition
Products and services transferred at a point in time	$	267,907	$	231,653	$	499,560	$	275,438	$	239,247	$	514,685
Services transferred over time	130,488		22,348		152,836		113,395		20,657		134,052
	$	398,395	$	254,001	$	652,396	$	388,833	$	259,904	$	648,737



	Cisbio			Meizheng			Other
	(In thousands)
Fair value of business combination:
Cash payments	$	219,795		$	145,000		$	45,042
Other liability	—			6,446			638
Contingent consideration	—			12,100			634
Working capital and other adjustments	138			2,961			302
Less: cash acquired	(12,542		)	(2,108		)	(1,334		)
Total	$	207,391		$	164,399		$	45,282
Identifiable assets acquired and liabilities assumed:
Current assets	$	43,554		$	15,160		$	4,042
Property, plant and equipment	4,835			6,278			727
Other assets	100			32			481
Identifiable intangible assets:
Core technology	89,000			36,600			27,667
Trade names	5,000			4,900			1,310
Customer relationships	39,000			55,800			6,700
Goodwill	73,061			79,175			17,005
Deferred taxes	(34,606		)	(21,849		)	(6,657		)
Debt assumed	—			(706		)	(2,698		)
Liabilities assumed	(12,553		)	(10,991		)	(3,295		)
Total	$	207,391		$	164,399		$	45,282



	Workforce Reductions					Closure of Excess Facility				Total		(Expected) Date Payments Substantially Completed by
	Headcount Reduction	Discovery & Analytical Solutions		Diagnostics		Discovery & Analytical Solutions		Diagnostics				Severance	Excess Facility
	Headcount Reduction	Discovery & Analytical Solutions		Diagnostics		Discovery & Analytical Solutions		Diagnostics				Severance	Excess Facility
	(In thousands, except headcount data)
Q1 2020 Plan	32	$	2,312	$	1,134	$	92	$	682	$	4,220	Q4 FY2020	Q1 FY2022
Q4 2019 Plan	22	$	177	2,404		—		—		2,581		Q3 FY2020	—
Q3 2019 Plan	259	$	11,156	2,641		—		—		13,797		Q2 FY2020	—
Q2 2019 Plan	44	4,461		1,129		—		—		5,590		Q1 FY2020	—
Q1 2019 Plan	105	6,001		1,459		—		—		7,460		Q4 FY2019	—



	Balance at December 29, 2019		2020 Charges		2020 Changes in Estimates, Net		2020 Amounts Paid			Balance at April 5, 2020
	(In thousands)
Severance:
Q1 2020 Plan	$	—	$	3,446	$	—	$	(791	)	$	2,655
Q4 2019 Plan	889		—		—		(40		)	849
Q3 2019 Plan	6,311		—		—		(1,456		)	4,855
Q2 2019 Plan	1,889		—		—		(857		)	1,032
Q1 2019 Plan	2,129		—		—		(669		)	1,460

Facility:
Q1 2020 Plan	—		774		—		(92		)	682

Previous Plans	1,647		—		—		(112		)	1,535
Restructuring	12,865		4,220		—		(4,017		)	13,068
Contract Termination	188		—		212		—			400
Other Costs	827		1,426		—		(598		)	1,655
Total Restructuring and Other Liabilities	$	13,880	$	5,646	$	212	$	(4,615	)	$	15,123


•	Discovery & Analytical Solutions. Provides products and services targeted towards the life sciences and applied markets.



	April 5, 2020		December 29, 2019
	(In thousands)
Raw materials	$	140,480	$	130,673
Work in progress	26,712		26,409
Finished goods	225,972		199,855
Total inventories	$	393,164	$	356,937



	Three Months Ended
	April 5, 2020	March 31, 2019
	(In thousands)
Number of common shares—basic	111,121	110,543
Effect of dilutive securities:
Stock options	480	631
Restricted stock awards	43	119
Number of common shares—diluted	111,644	111,293
Number of potentially dilutive securities excluded from calculation due to antidilutive impact	491	485


•	Diagnostics. Develops diagnostics, tools and applications focused on clinically-oriented customers, especially within the reproductive health, immunodiagnostics and applied genomics markets. The Diagnostics segment serves the diagnostics market.



	Three Months Ended
	April 5, 2020		March 31, 2019
Risk-free interest rate	0.9	%	2.6	%
Expected dividend yield	0.3	%	0.3	%
Expected term	5 years		5 years
Expected stock volatility	23.8	%	22.8	%



	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Total Intrinsic Value
	(In thousands)				(In years)	(In millions)
Outstanding at December 29, 2019	1,535		$	60.42
Granted	266		86.87
Exercised	(21	)	52.69
Forfeited	(30	)	85.13
Outstanding at April 5, 2020	1,750		$	64.10	3.7	$	24.0
Exercisable at April 5, 2020	1,296		$	56.01	2.7	$	23.9



	Number of Shares		Weighted- Average Grant- Date Fair Value
	(In thousands)
Nonvested at December 29, 2019	345		$	78.69
Granted	156		84.18
Vested	(165	)	70.80
Forfeited	(16	)	82.94
Nonvested at April 5, 2020	320		$	85.20



	Discovery & Analytical Solutions			Diagnostics			Consolidated
	(In thousands)
Balance at December 29, 2019	$	1,498,820		$	1,612,407		$	3,111,227
Foreign currency translation	(27,914		)	(30,027		)	(57,941		)
Acquisitions, earn-outs and other	(1,592		)	—			(1,592		)
Balance at April 5, 2020	$	1,469,314		$	1,582,380		$	3,051,694



	Defined Benefit Pension Benefits						Postretirement Medical Benefits
	Three Months Ended
	April 5, 2020			March 31, 2019			April 5, 2020			March 31, 2019
	(In thousands)
Service and administrative costs	$	1,907		$	1,633		$	18		$	22
Interest cost	3,144			4,159			24			29
Expected return on plan assets	(5,384		)	(6,176		)	(347		)	(294		)
Amortization of prior service costs	—			(39		)	—			—
Net periodic pension credit	$	(333	)	$	(423	)	$	(305	)	$	(243	)



				Fair Value Measurements at April 5, 2020 Using:
	Total Carrying Value at April 5, 2020			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(In thousands)
Marketable securities	$	2,888		$	2,888	$	—		$	—
Foreign exchange derivative assets	4,105			—		4,105			—
Foreign exchange derivative liabilities	(1,316		)	—		(1,316		)	—
Contingent consideration	(22,777		)	—		—			(22,777		)



				Fair Value Measurements at December 29, 2019 Using:
	Total Carrying Value at December 29, 2019			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(In thousands)
Marketable securities	$	2,906		$	2,906	$	—		$	—
Foreign exchange derivative assets	451			—		451			—
Foreign exchange derivative liabilities	(1,538		)	—		(1,538		)	—
Contingent consideration	(35,481		)	—		—			(35,481		)


•	changes in sales due to weakness in markets in which we sell our products and services, and


•	changes in our working capital requirements and capital expenditures.


•	financial covenants contained in the financial instruments controlling our borrowings that limit our total borrowing capacity,


•	increases in interest rates applicable to our outstanding variable rate debt,


•	a ratings downgrade that could limit the amount we can borrow under our senior unsecured revolving credit facility and our overall access to the corporate debt market,


•	increases in interest rates or credit spreads, as well as limitations on the availability of credit, that affect our ability to borrow under future potential facilities on a secured or unsecured basis,


•	volatility in the public debt and equity markets, including as a result of the COVID-19 pandemic.


•	innovate and develop new reliable technologies and applications,


•	successfully commercialize new technologies in a timely manner,


•	price our products competitively, and manufacture and deliver our products in sufficient volumes and on time, and


•	differentiate our offerings from our competitors’ offerings.


•	our inability to raise capital to fund these acquisitions.


•	changes in the level of economic activity in regions in which we do business, including as a result of global health crises or pandemics, including COVID-19,


•	changes in general economic conditions or government funding,