Revvity, Inc 10-Q for FY2020 Q2

Revvity, Inc. (RVTY)

10-Q 2020-08-11 For: 2020-07-05

Added on April 10, 2026

About this 10-Q

Revvity, Inc filed this 10-Q on August 11, 2020, covering the quarter ended July 5, 2020 (FY2020 Q2).

Headline figures

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

Revenue: $811.72M; up 12.3% from $722.52M a year earlier
Net income: $137.16M; up 98.5% from net income of $69.09M a year earlier
Diluted EPS: $1.23; up 98.4% from $0.62 a year earlier

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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


		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	9
	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Overview	36
	Critical Accounting Policies and Estimates	37
	Consolidated Results of Continuing Operations	37
	Reporting Segment Results of Continuing Operations	42
	Liquidity and Capital Resources	43
	Dividends	48
	Contractual Obligations	48
	Effects of Recently Adopted and Issued Accounting Pronouncements	48

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	50

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59

Item 6.	Exhibits	60

Signatures			61


	Three Months Ended						Six Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands, except per share data)
Product revenue	$	601,506	$	502,114	$	1,027,035	$	940,836
Service revenue	210,212		220,403		437,079		430,418
Total revenue	811,718		722,517		1,464,114		1,371,254
Cost of product revenue	240,494		238,455		446,684		444,731
Cost of service revenue	123,880		136,269		262,063		270,924
Total cost of revenue	364,374		374,724		708,747		715,655
Selling, general and administrative expenses	221,026		201,553		429,595		400,410
Research and development expenses	49,521		48,344		98,435		96,324
Restructuring and other costs, net	1,158		6,161		7,016		13,800
Operating income from continuing operations	175,639		91,735		220,321		145,065
Interest and other expense, net	10,812		19,908		20,805		36,473
Income from continuing operations before income taxes	164,827		71,827		199,516		108,592
Provision for income taxes	27,614		2,686		28,588		3,998
Income from continuing operations	137,213		69,141		170,928		104,594

Loss on disposition of discontinued operations before income taxes	—		—		—		—
Provision for income taxes on discontinued operations and dispositions	51		54		101		95
Loss from discontinued operations and dispositions	(51)		(54)		(101)		(95)
Net income	$	137,162	$	69,087	$	170,827	$	104,499
Basic earnings per share:
Income from continuing operations	$	1.23	$	0.62	$	1.54	$	0.94
Loss from discontinued operations and dispositions	(0.00)		(0.00)		(0.00)		(0.00)
Net income	$	1.23	$	0.62	$	1.54	$	0.94
Diluted earnings per share:
Income from continuing operations	$	1.23	$	0.62	$	1.53	$	0.94
Loss from discontinued operations and dispositions	(0.00)		(0.00)		(0.00)		(0.00)
Net income	$	1.23	$	0.62	$	1.53	$	0.94
Weighted average shares of common stock outstanding:
Basic	111,329		110,845		111,225		110,694
Diluted	111,869		111,528		111,756		111,411
Cash dividends declared per common share	$	0.07	$	0.07	$	0.14	$	0.14


	Three Months Ended						Six Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands)
Net income	$	137,162	$	69,087	$	170,827	$	104,499
Other comprehensive income (loss):
Foreign currency translation adjustments	61,568		(7,320)		(17,025)		(4,254)


Unrealized gain (loss) on securities, net of tax	87		103		(1)		(17)
Other comprehensive income (loss)	61,655		(7,217)		(17,026)		(4,271)
Comprehensive income	$	198,817	$	61,870	$	153,801	$	100,228


	July 5, 2020		December 29, 2019
	(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	218,536	$	191,877
Accounts receivable, net	708,799		725,184

Inventories	477,707		356,937
Other current assets	126,371		100,381

Total current assets	1,531,413		1,374,379
Property, plant and equipment:
At cost	729,596		701,580
Accumulated depreciation	(406,807)		(383,357)
Property, plant and equipment, net	322,789		318,223
Operating lease right-of-use assets	195,222		167,276
Intangible assets, net	1,188,464		1,283,286
Goodwill	3,107,373		3,111,227
Other assets, net	291,555		284,173

Total assets	$	6,636,816	$	6,538,564
Current liabilities:
Current portion of long-term debt	$	346,342	$	9,974
Accounts payable	255,137		235,855
Short-term accrued restructuring and other costs	9,613		11,559
Accrued expenses and other current liabilities	550,067		503,332
Current liabilities of discontinued operations	2,097		2,112
Total current liabilities	1,163,256		762,832
Long-term debt	1,624,996		2,064,041
Long-term liabilities	703,208		751,468
Operating lease liabilities	177,893		146,399

Total liabilities	3,669,353		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 111,501,000 shares and 111,140,000 shares at July 5, 2020 and December 29, 2019, respectively	111,501		111,140
Capital in excess of par value	106,744		90,357
Retained earnings	2,965,890		2,811,973
Accumulated other comprehensive loss	(216,672)		(199,646)
Total stockholders’ equity	2,967,463		2,813,824
Total liabilities and stockholders’ equity	$	6,636,816	$	6,538,564


☑			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


	For the Six-Month Period Ended July 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
Net income	—		—		137,162		—		137,162
Other comprehensive income	—		—		—		61,655		61,655
Dividends	—		—		(7,803)		—		(7,803)
Exercise of employee stock options and related income tax benefits	175		8,792		—		—		8,967
Issuance of common stock for employee stock purchase plans	14		1,291		—		—		1,305
Purchases of common stock	(4)		(323)		—		—		(327)
Issuance of common stock for long-term incentive program	2		5,123		—		—		5,125
Stock compensation	8		1,625		—		—		1,633
Balance, July 5, 2020	$	111,501	$	106,744	$	2,965,890	$	(216,672)	$	2,967,463


	For the Six-Month Period Ended June 30, 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
Net income	—		—		69,087		—		69,087
Other comprehensive loss	—		—		—		(7,217)		(7,217)
Dividends	—		—		(7,746)		—		(7,746)
Exercise of employee stock options and related income tax benefits	167		7,777		—		—		7,944
Issuance of common stock for employee stock purchase plans	15		1,387		—		—		1,402
Purchases of common stock	(7)		(757)		—		—		(764)
Issuance of common stock for long-term incentive program	5		4,384		—		—		4,389
Stock compensation	—		1,300		—		—		1,300
Balance, June 30, 2019	$	111,071	$	72,181	$	2,704,367	$	(180,752)	$	2,706,867


	Reportable Segments
	Three Months Ended
	July 5, 2020										June 30, 2019
	Discovery & Analytical Solutions		Diagnostics		Total		Discovery & Analytical Solutions		Diagnostics		Total
	(In thousands)
Primary geographical markets
Americas	$	160,382	$	156,609	$	316,991	$	177,974	$	105,636	$	283,610
Europe	103,497		149,867		253,364		123,809		72,646		196,455
Asia	127,123		114,240		241,363		132,184		110,268		242,452
	$	391,002	$	420,716	$	811,718	$	433,967	$	288,550	$	722,517

Primary end-markets
Diagnostics	$	—	$	420,716	$	420,716	$	—	$	288,550	$	288,550
Life sciences	237,120		—		237,120		241,862		—		241,862
Applied markets	153,882		—		153,882		192,105		—		192,105
	$	391,002	$	420,716	$	811,718	$	433,967	$	288,550	$	722,517

Timing of revenue recognition
Products and services transferred at a point in time	$	265,903	$	398,646	$	664,549	$	316,713	$	267,450	$	584,163
Services transferred over time	125,099		22,070		147,169		117,254		21,100		138,354
	$	391,002	$	420,716	$	811,718	$	433,967	$	288,550	$	722,517


	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		45		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	73,417		78,686		17,005
Deferred taxes	(34,962)		(21,494)		(6,657)

Debt assumed	—		(706)		(2,698)
Liabilities assumed	(12,553)		(10,870)		(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

	(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 July 5, 2020
	(In thousands)
Severance:

Q1 2020 Plan	$	—	$	3,446	$	—	$	(1,791)	$	1,655
Q4 2019 Plan	889		—		(69)		(454)		366
Q3 2019 Plan	6,311		—		—		(1,798)		4,513
Q2 2019 Plan	1,889		—		—		(1,152)		737
Q1 2019 Plan	2,129		—		—		(669)		1,460

Facility:

Q1 2020 Plan	—		774		—		(120)		654

Previous Plans	1,647		—		69		(52)		1,664
Restructuring	12,865		4,220		—		(6,036)		11,049
Contract Termination	188		—		212		(26)		374
Other Costs	827		2,584		—		(930)		2,481
Total Restructuring and Other Liabilities	$	13,880	$	6,804	$	212	$	(6,992)	$	13,904


	Three and Six Months Ended
	July 5, 2020		June 30, 2019
Risk-free interest rate	0.9	%	1.9	%
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	(196)	51.35

Forfeited	(65)	87.41
Outstanding at July 5, 2020	1,540	$	65.00	3.6	$	50.7
Exercisable at July 5, 2020	1,123	$	56.75	2.7	$	46.2


	Six Months Ended
	July 5, 2020		June 30, 2019
	(In thousands)
Operating activities:
Net income	$	170,827	$	104,499
Loss from discontinued operations and dispositions, net of income taxes	101		95
Income from continuing operations	170,928		104,594
Adjustments to reconcile income from continuing operations to net cash provided by (used in) continuing operations:
Stock-based compensation	12,654		12,801
Restructuring and other costs, net	7,016		13,800
Depreciation and amortization	120,047		103,793
Loss on disposition of businesses and assets, net	485		2,469

Change in fair value of contingent consideration	(11,446)		3,161

Amortization of deferred debt financing costs and accretion of discounts	1,642		1,790
Amortization of acquired inventory revaluation	1,485		5,565
Changes in assets and liabilities which provided (used) cash, excluding effects from companies acquired:
Accounts receivable, net	4,312		(9,604)

Inventories	(126,707)		(50,450)
Accounts payable	20,907		(39,951)

Accrued expenses and other	(2,677)		(106,425)
Net cash provided by operating activities of continuing operations	198,646		41,543
Net cash used in operating activities of discontinued operations	—		—
Net cash provided by operating activities	198,646		41,543
Investing activities:
Capital expenditures	(37,138)		(36,461)
Purchases of investments	(7,393)		(868)
Purchases of licenses	—		(5,000)
Proceeds from disposition of businesses and assets	1,815		550
Proceeds from surrender of life insurance policies	131		—
Activity related to acquisitions, net of cash and cash equivalents acquired	(2,990)		(244,738)
Net cash used in investing activities of continuing operations	(45,575)		(286,517)
Net cash provided by investing activities of discontinued operations	—		—
Net cash used in investing activities	(45,575)		(286,517)
Financing activities:
Payments on borrowings	(290,000)		(578,000)


	July 5, 2020		December 29, 2019
	(In thousands)
Raw materials	$	191,777	$	130,673
Work in progress	32,235		26,409
Finished goods	253,695		199,855
Total inventories	$	477,707	$	356,937


	July 5, 2020		December 29, 2019
	(In thousands)
Patents	$	30,832	$	30,831
Less: Accumulated amortization	(28,165)		(27,423)
Net patents	2,667		3,408
Trade names and trademarks	87,945		87,997
Less: Accumulated amortization	(43,826)		(40,295)
Net trade names and trademarks	44,119		47,702
Licenses	58,406		58,496
Less: Accumulated amortization	(51,397)		(49,733)
Net licenses	7,009		8,763
Core technology	686,482		689,089
Less: Accumulated amortization	(349,442)		(320,926)
Net core technology	337,040		368,163
Customer relationships	1,162,752		1,161,526
Less: Accumulated amortization	(437,073)		(378,188)
Net customer relationships	725,679		783,338
IPR&D	1,366		1,328
Net amortizable intangible assets	1,117,880		1,212,702
Non-amortizing intangible asset:
Trade name	70,584		70,584
Total	$	1,188,464	$	1,283,286


	Three Months Ended						Six Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands)
Balance at beginning of period	$	9,041	$	8,159	$	8,812	$	8,393
Provision charged to income	3,473		2,934		6,185		5,702
Payments	(2,889)		(3,283)		(6,155)		(6,537)
Adjustments to previously provided warranties, net	655		149		1,707		419
Foreign currency translation and acquisitions	190		26		(79)		8
Balance at end of period	$	10,470	$	7,985	$	10,470	$	7,985


	Number of Shares	Weighted- Average Grant- Date Fair Value
	(In thousands)
Nonvested at December 29, 2019	345	$	78.69
Granted	181	84.13
Vested	(181)	71.80
Forfeited	(28)	84.80
Nonvested at July 5, 2020	317	$	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	(1,059)		(1,106)		(2,165)

Acquisitions, earn-outs and other	(1,689)		—		(1,689)
Balance at July 5, 2020	$	1,496,072	$	1,611,301	$	3,107,373


	Defined Benefit Pension Benefits						Postretirement Medical Benefits
	Three Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands)
Service and administrative costs	$	1,688	$	1,629	$	18	$	22
Interest cost	3,138		4,150		23		29
Expected return on plan assets	(5,371)		(6,161)		(347)		(294)


Amortization of prior service costs	—		(38)		—		—
Net periodic pension credit	$	(545)	$	(420)	$	(306)	$	(243)

	Defined Benefit Pension Benefits						Postretirement Medical Benefits
	Six Months Ended
	July 5, 2020		June 30, 2019		July 5, 2020		June 30, 2019
	(In thousands)
Service cost	$	3,595	$	3,262	$	36	$	44
Interest cost	6,282		8,309		47		58
Expected return on plan assets	(10,755)		(12,337)		(694)		(588)


Amortization of prior service costs	—		(77)		—		—
Net periodic benefit credit	$	(878)	$	(843)	$	(611)	$	(486)


			Fair Value Measurements at July 5, 2020 Using:
	Total Carrying Value at July 5, 2020		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Marketable securities	$	3,145	$	3,145	$	—	$	—
Foreign exchange derivative assets	4,065		—		4,065		—
Foreign exchange derivative liabilities	(984)		—		(984)		—
Contingent consideration	(13,726)		—		—		(13,726)


			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)


	Issuer Repurchases of Equity Securities
Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾	Maximum Number (or Approximate Dollar Value) Shares that May Yet Be Purchased Under the Plans or Programs
April 6, 2020—May 3, 2020	266	$	80.32	—	$	197,803,699
May 4, 2020—May 31, 2020	3,039	91.97		—	197,803,699
June 1, 2020—July 5, 2020	269	98.48		—	197,803,699
Activity for quarter ended July 5, 2020	3,574	$	91.59	—	$	197,803,699


Exhibit Number						Exhibit Name

31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).


Date:	August 11, 2020	/s/ PRAHLAD SINGH, PhD
		Prahlad Singh, PhD President and Chief Executive Officer


Date:	August 11, 2020	/s/ JAMES M. MOCK
		James M. Mock Senior Vice President and Chief Financial Officer


Dated:	August 11, 2020	/S/ PRAHLAD SINGH, PhD
		Prahlad Singh, PhD President and Chief Executive Officer

Dated:	August 11, 2020	/S/ JAMES M. MOCK
		James M. Mock Senior Vice President and Chief Financial Officer