- Fourth quarter revenue of $696 million; (6)% reported
growth; (7)% organic growth; (3)% non-COVID organic growth
- Fourth quarter GAAP EPS of $0.64; Adjusted EPS from
continuing operations of $1.25
- Initiates full year 2024 guidance
Revvity, Inc. (NYSE: RVTY), today reported financial results for
the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023
The Company reported GAAP earnings per share of $0.64, as
compared to $1.01 in the same period a year ago. GAAP revenue for
the quarter was $696 million, as compared to $741 million in the
same period a year ago. GAAP operating income from continuing
operations for the quarter was $77 million, as compared to $137
million for the same period a year ago. GAAP operating profit
margin from continuing operations was 11.1% as a percentage of
revenue, as compared to 18.5% in the same period a year ago.
Adjusted earnings per share from continuing operations for the
quarter was $1.25, as compared to $1.41 in the same period a year
ago. Adjusted revenue for the quarter was $696 million, as compared
to $741 million in the same period a year ago. Adjusted operating
income was $192 million, as compared to $240 million for the same
period a year ago. Adjusted operating profit margin was 27.5% as a
percentage of adjusted revenue, as compared to 32.3% in the same
period a year ago.
Full Year 2023
The Company reported GAAP earnings per share of $5.55 in 2023,
as compared to $4.50 in 2022. GAAP revenue for the year was $2,751
million, as compared to $3,312 million in 2022. GAAP operating
income from continuing operations for the year was $301 million, as
compared to $743 million for 2022. GAAP operating profit margin
from continuing operations for the year was 10.9% as a percentage
of revenue, as compared to 22.4% in 2022.
Adjusted earnings per share from continuing operations for the
year was $4.65, as compared to $6.92 in 2022. Adjusted revenue for
the year was $2,751 million, as compared to $3,313 million in 2022.
Adjusted operating income for the year was $770 million, as
compared to $1,212 million in 2022. Adjusted operating profit
margin for the year was 28.0% as a percentage of adjusted revenue,
as compared to 36.6% in 2022.
Adjustments for the Company's non-GAAP financial measures have
been noted in the attached reconciliations.
“We persevered through continued industry headwinds and
performed better than anticipated during the final months of 2023,”
said Prahlad Singh, president and chief executive officer of
Revvity. “We are leading with innovation to be a strategic
scientific partner with our customers, which positions us well to
continue to perform at a high level for years to come.”
Financial Overview by Reporting Segment for the Fourth
Quarter and Full Year 2023
Life Sciences
- Fourth quarter 2023 revenue was $320 million, as compared to
$347 million in the same period a year ago. Reported revenue
decreased 8% and organic revenue decreased 9% as compared to the
same period a year ago.
- Full year 2023 revenue was $1,292 million, as compared to
$1,293 million in 2022. Reported revenue and organic revenue were
both flat as compared to the same period a year ago.
- Fourth quarter 2023 adjusted operating income was $118 million,
as compared to $146 million in the same period a year ago. Adjusted
operating profit margin was 36.9% as a percentage of adjusted
revenue, as compared to 41.9% in the same period a year ago.
- Full year 2023 adjusted operating income was $489 million, as
compared to $503 million in 2022. Adjusted operating profit margin
was 37.9% as a percentage of adjusted revenue, as compared to 38.9%
in 2022.
Diagnostics
- Fourth quarter 2023 revenue was $376 million, as compared to
$394 million in the same period a year ago. Reported revenue
decreased 4% and organic revenue decreased 6% as compared to the
same period a year ago.
- Full year 2023 revenue was $1,459 million, as compared to
$2,020 million in 2022. Reported revenue decreased 28% and organic
revenue decreased 27% as compared to the same period a year
ago.
- Fourth quarter 2023 adjusted operating income was $80 million,
as compared to $113 million in the same period a year ago. Adjusted
operating profit margin was 21.1% as a percentage of adjusted
revenue, as compared to 28.7% in the same period a year ago.
- Full year 2023 adjusted operating income was $321 million, as
compared to $782 million in 2022. Adjusted operating profit margin
was 22.0% as a percentage of adjusted revenue, as compared to 38.7%
in 2022.
Initiates Full Year 2024 Guidance
For the full year 2024, the Company forecasts total revenue of
$2.79-$2.85 billion and adjusted earnings per share of
$4.55-$4.75.
Guidance for the full year 2024 is provided on a non-GAAP basis
and cannot be reconciled to the closest GAAP measures without
unreasonable effort due to the unpredictability of the amounts and
timing of events affecting the items the Company excludes from
these non-GAAP measures. The timing and amounts of such events and
items could be material to the Company’s results prepared in
accordance with GAAP.
Webcast Information
The Company will discuss its fourth quarter and full year 2023
results and its outlook for business trends during a webcast on
February 1, 2024, at 8:00 a.m. Eastern Time. A live audio webcast
and presentation will be available on the Investors section of the
Company’s website.
Use of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
generally accepted accounting principles (GAAP), this earnings
announcement also contains non-GAAP financial measures. The reasons
that we use these measures, a reconciliation of these measures to
the most directly comparable GAAP measures, and other information
relating to these measures are included below following our GAAP
financial statements.
Factors Affecting Future Performance
This press release contains "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including, but not limited to, statements relating to
estimates and projections of future earnings per share, cash flow
and revenue growth and other financial results, developments
relating to our customers and end-markets, and plans concerning
business development opportunities, acquisitions and divestitures.
Words such as "believes," "intends," "anticipates," "plans,"
"expects," "estimates," "projects," "forecasts," "will" and similar
expressions, and references to guidance, are intended to identify
forward-looking statements. Such statements are based on
management's current assumptions and expectations and no assurances
can be given that our assumptions or expectations will prove to be
correct. A number of important risk factors could cause actual
results to differ materially from the results described, implied or
projected in any forward-looking statements. These factors include,
without limitation: (1) markets into which we sell our products
declining or not growing as anticipated; (2) the effect of the
COVID-19 pandemic on our sales and operations; (3) fluctuations in
the global economic and political environments; (4) our failure to
introduce new products in a timely manner; (5) our ability to
execute acquisitions and divestitures, license technologies, or to
successfully integrate acquired businesses and licensed
technologies into our existing business or to make them profitable;
(6) our ability to compete effectively; (7) fluctuation in our
quarterly operating results and our ability to adjust our
operations to address unexpected changes; (8) significant
disruption in third-party package delivery and import/export
services or significant increases in prices for those services; (9)
disruptions in the supply of raw materials and supplies; (10) our
ability to retain key personnel; (11) significant disruption in our
information technology systems, or cybercrime; (12) our ability to
realize the full value of our intangible assets; (13) our failure
to adequately protect our intellectual property; (14) the loss of
any of our licenses or licensed rights; (15) the manufacture and
sale of products exposing us to product liability claims; (16) our
failure to maintain compliance with applicable government
regulations; (17) regulatory changes; (18) our failure to comply
with healthcare industry regulations; (19) economic, political and
other risks associated with foreign operations; (20) our ability to
obtain future financing; (21) restrictions in our credit
agreements; (22) significant fluctuations in our stock price; (23)
reduction or elimination of dividends on our common stock; and (24)
other factors which we describe under the caption "Risk Factors" in
our most recent quarterly report on Form 10-Q and in our other
filings with the Securities and Exchange Commission. We disclaim
any intention or obligation to update any forward-looking
statements as a result of developments occurring after the date of
this press release.
About Revvity
At Revvity, “impossible” is inspiration, and “can’t be done” is
a call to action. Revvity provides health science solutions,
technologies, expertise and services that deliver complete
workflows from discovery to development, and diagnosis to cure.
Revvity is revolutionizing what’s possible in healthcare, with
specialized focus areas in translational multi-omics technologies,
biomarker identification, imaging, prediction, screening, detection
and diagnosis, informatics and more.
With 2023 revenue of more than $2.7 billion and over 11,000
employees, Revvity serves customers across pharmaceutical and
biotech, diagnostic labs, academia and governments. It is part of
the S&P 500 index and has customers in more than 190
countries.
Stay updated by following our Newsroom, LinkedIn, X, YouTube,
Facebook and Instagram.
Revvity, Inc. and
Subsidiaries
CONDENSED CONSOLIDATED INCOME
STATEMENTS
Three
Months Ended
Twelve
Months Ended
(In thousands, except per
share data)
December
31, 2023
January
1, 2023
December
31, 2023
January
1, 2023
Revenue
$
695,901
$
741,214
$
2,750,571
$
3,311,822
Cost of revenue
312,423
304,884
1,210,880
1,321,992
Selling, general and
administrative expenses
256,723
244,325
1,022,551
1,025,514
Research and development
expenses
49,596
54,536
216,578
221,617
Operating income from
continuing operations
77,159
137,469
300,562
742,699
Interest income
(18,363
)
(1,565
)
(72,131
)
(3,589
)
Interest expense
24,582
22,508
98,813
103,955
Change in fair value of financial
securities
21,079
1,433
33,921
15,754
Other expense (income), net
18,482
(23,354
)
56,983
(25,258
)
Income from continuing
operations, before income taxes
31,379
138,447
182,976
651,837
(Benefit from) provision for
income taxes
(32,188
)
40,950
3,473
139,161
Income from continuing
operations
63,567
97,497
179,503
512,676
Income from discontinued
operations
14,996
30,161
513,591
56,503
Net income
$
78,563
$
127,658
$
693,094
$
569,179
Diluted earnings per
share:
Income from continuing
operations
$
0.52
$
0.77
$
1.44
$
4.06
Income from discontinued
operations
0.12
0.24
4.11
0.45
Net income
$
0.64
$
1.01
$
5.55
$
4.50
Weighted average diluted shares
of common stock outstanding
123,412
126,476
124,812
126,426
ABOVE PREPARED IN ACCORDANCE WITH
GAAP
Additional supplemental
information (1):
(per share, continuing
operations)
GAAP EPS from continuing
operations
$
0.52
$
0.77
$
1.44
$
4.06
Amortization of intangible
assets
0.73
0.71
2.93
2.93
Debt extinguishment costs
(0.00
)
(0.02
)
(0.03
)
(0.02
)
Purchase accounting
adjustments
0.02
0.00
0.05
0.36
Acquisition and
divestiture-related costs
0.08
0.11
0.71
0.32
Change in fair value of financial
securities
0.17
0.01
0.27
0.12
Significant litigation matters
and settlements
0.00
0.00
0.00
(0.00
)
Significant environmental
matters
0.01
-
0.02
-
Disposition of businesses and
assets, net
-
(0.02
)
-
(0.02
)
Mark to market on postretirement
benefits
0.08
(0.18
)
0.08
(0.18
)
Restructuring and other, net
0.09
(0.01
)
0.21
0.11
Tax on above items
(0.29
)
(0.07
)
(1.02
)
(0.84
)
Significant tax items
(0.14
)
0.12
(0.01
)
0.10
Adjusted EPS from continuing
operations
$
1.25
$
1.41
$
4.65
$
6.92
(1) amounts may not sum due to
rounding
Revvity, Inc. and Subsidiaries
REVENUE AND OPERATING INCOME
(LOSS)
Three
Months Ended
Twelve
Months Ended
(In thousands, except percentages)
December
31, 2023
January
1, 2023
December
31, 2023
January
1, 2023
Adjusted revenue and operating income Reported
revenue
$
695,901
$
741,214
$
2,750,571
$
3,311,822
Revenue purchase accounting adjustments
209
205
827
814
Adjusted revenue
696,110
741,419
2,751,398
3,312,636
Reported operating income from continued operations
77,159
137,469
300,562
742,699
OP%
11.1
%
18.5
%
10.9
%
22.4
%
Amortization of intangible assets
89,624
90,169
365,113
370,638
Purchase accounting adjustments
2,899
87
5,956
45,681
Acquisition and divestiture-related costs
10,079
13,961
69,159
39,826
Significant litigation matters and settlements
12
5
12
(627
)
Significant environmental matters
1,325
-
2,457
-
Restructuring and other, net
10,665
(1,863
)
26,601
13,580
Adjusted operating income
$
191,763
$
239,828
$
769,860
$
1,211,797
OP%
27.5
%
32.3
%
28.0
%
36.6
%
Segment revenue and segment operating income
Life Sciences
$
319,691
$
347,425
$
1,292,340
$
1,292,909
Diagnostics
376,419
393,994
1,459,058
2,019,727
Revenue purchase accounting adjustments
(209
)
(205
)
(827
)
(814
)
Reported revenue
695,901
741,214
2,750,571
3,311,822
Life Sciences
117,939
145,582
489,349
503,243
36.9
%
41.9
%
37.9
%
38.9
%
Diagnostics
79,514
113,004
320,928
781,985
21.1
%
28.7
%
22.0
%
38.7
%
Corporate
(5,690
)
(18,758
)
(40,417
)
(73,431
)
Subtotal reportable segments adjusted operating income
191,763
239,828
769,860
1,211,797
Amortization of intangible assets
(89,624
)
(90,169
)
(365,113
)
(370,638
)
Purchase accounting adjustments
(2,899
)
(87
)
(5,956
)
(45,681
)
Acquisition and divestiture-related costs
(10,079
)
(13,961
)
(69,159
)
(39,826
)
Significant litigation matters and settlements
(12
)
(5
)
(12
)
627
Significant environmental matters
(1,325
)
-
(2,457
)
-
Restructuring and other, net
(10,665
)
1,863
(26,601
)
(13,580
)
Reported operating income from continued operations
$
77,159
$
137,469
$
300,562
$
742,699
REPORTED REVENUE AND REPORTED
OPERATING INCOME (LOSS) PREPARED IN ACCORDANCE WITH GAAP
Revvity, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
December
31, 2023
January
1, 2023
Current assets: Cash and cash equivalents
$
913,163
$
454,358
Marketable securities
689,916
-
Accounts receivable, net
632,811
612,780
Inventories, net
428,062
405,462
Other current assets
337,139
122,254
Current assets of discontinued operations
-
1,693,704
Total current assets
3,001,091
3,288,558
Property, plant and equipment, net
509,654
482,950
Operating lease right-of-use assets, net
155,083
188,351
Intangible assets, net
3,022,321
3,377,174
Goodwill
6,533,550
6,481,768
Other assets, net
342,966
311,054
Total assets
$
13,564,665
$
14,129,855
Current liabilities: Current portion of long-term debt
$
721,872
$
470,929
Accounts payable
204,121
272,826
Accrued expenses and other current liabilities
524,470
527,863
Current liabilities of discontinued operations
-
272,865
Total current liabilities
1,450,463
1,544,483
Long-term debt
3,177,770
3,923,347
Long-term liabilities
930,946
1,109,181
Operating lease liabilities
132,747
169,968
Total liabilities
5,691,926
6,746,979
Total stockholders' equity
7,872,739
7,382,876
Total liabilities and stockholders' equity
$
13,564,665
$
14,129,855
PREPARED IN ACCORDANCE WITH
GAAP
Revvity, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Three
Months Ended
Twelve
Months Ended
December
31, 2023
January
1, 2023
December
31, 2023
January
1, 2023
(In thousands)
(In thousands)
Operating activities: Net income
$
78,563
$
127,658
$
693,094
$
569,179
Income from discontinued operations, net of income taxes
(14,996
)
(30,161
)
(513,591
)
(56,503
)
Income from continuing operations
63,567
97,497
179,503
512,676
Adjustments to reconcile income from continuing operations to net
cash provided by (used in) continuing operations: Stock-based
compensation
7,181
11,742
41,410
51,518
Restructuring and other, net
10,665
(1,863
)
26,601
13,580
Depreciation and amortization
105,568
104,234
431,769
427,000
Pension and other postretirement expenses
23,089
(23,104
)
23,089
(23,104
)
Change in fair value of contingent consideration
2,450
(608
)
4,168
(1,377
)
Deferred taxes
(123,664
)
(105,923
)
(123,664
)
(105,923
)
Contingencies and non-cash tax matters
26,183
(1,488
)
26,183
(1,488
)
Amortization of deferred debt financing costs and accretion of
discounts
1,549
1,264
7,349
7,310
Gains on disposition of businesses and assets, net
-
(2,887
)
-
(2,887
)
Change in fair value of financial securities
21,079
1,433
33,921
15,754
Debt extinguishment gain
(263
)
(2,788
)
(3,685
)
(2,880
)
Unrealized foreign exchange loss
410
-
24,089
-
Amortization of acquired inventory revaluation
-
250
-
45,289
Changes in assets and liabilities which provided (used) cash,
excluding effects from companies acquired: Accounts receivable, net
21,916
(54,045
)
(8,997
)
66,093
Inventories
20,725
(4,159
)
(14,109
)
(48,634
)
Accounts payable
8,968
(15,836
)
(76,426
)
(43,804
)
Accrued expenses and other
31,181
123,466
(291,814
)
(236,623
)
Net cash provided by operating activities of continuing
operations
220,604
127,185
279,387
672,500
Net cash (used in) provided by operating activities of
discontinued operations
(23,991
)
11,973
(188,115
)
7,310
Net cash provided by operating activities
196,613
139,158
91,272
679,810
Investing activities: Capital expenditures
(24,116
)
(26,130
)
(81,368
)
(85,632
)
Purchases of investments
(300
)
(2,171
)
(6,300
)
(47,181
)
Purchases of US Treasury Securities
(390,390
)
-
(1,221,609
)
-
Proceeds from US Treasury Securities
-
550,000
Proceeds from notes receivables
-
-
-
8,890
Proceeds from disposition of businesses and assets
-
8,841
153
14,505
Cash paid for acquisitions, net of cash, cash equivalents and
restricted cash acquired
-
250
(2,086
)
(7,518
)
Net cash used in investing activities of continuing
operations
(414,806
)
(19,210
)
(761,210
)
(116,936
)
Net cash provided by (used in) investing activities of
discontinued operations
-
(6,474
)
2,074,734
(15,915
)
Net cash (used in) provided by investing activities
(414,806
)
(25,684
)
1,313,524
(132,851
)
Financing Activities: Payments on borrowings
-
(20,000
)
-
(240,000
)
Proceeds from borrowings
-
20,000
-
240,000
Payments of term loan
-
-
-
(500,000
)
Payments of senior unsecured notes
(5,835
)
(50,404
)
(523,808
)
(57,876
)
Payment of debt issuance costs
-
-
(15
)
-
Settlement of cash flow hedges
-
-
-
(762
)
Net (payments) proceeds on other credit facilities
(895
)
(810
)
6,323
(1,292
)
Payments for acquisition-related contingent consideration
-
-
(10,117
)
(5
)
Proceeds from issuance of common stock under stock plans
623
7,860
4,344
14,114
Purchases of common stock
(4,868
)
(24,501
)
(388,882
)
(80,638
)
Dividends paid
(8,639
)
(8,842
)
(34,966
)
(35,344
)
Net cash used in financing activities of continuing
operations
(19,614
)
(76,697
)
(947,121
)
(661,803
)
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash
14,222
17,657
(14,048
)
(33,747
)
Net (decrease) increase in cash, cash equivalents, and
restricted cash
(223,585
)
54,434
443,627
(148,591
)
Cash, cash equivalents, and restricted cash at beginning of period
1,137,958
416,312
470,746
619,337
Cash, cash equivalents, and restricted cash at end of period
$
914,373
$
470,746
$
914,373
$
470,746
Supplemental disclosure of cash flow
information: Reconciliation of cash, cash equivalents and
restricted cash reported within the consolidated balance sheets
that sum to the total shown in the consolidated statements of cash
flows: Cash and cash equivalents
$
913,163
$
454,358
$
913,163
$
454,358
Restricted cash included in other current assets
1,210
1,040
1,210
1,040
Restricted cash included in other assets
-
349
-
349
Cash and cash equivalents included in current assets of
discontinued operations
-
14,999
-
14,999
Total cash, cash equivalents and restricted cash
$
914,373
$
470,746
$
914,373
$
470,746
PREPARED IN ACCORDANCE WITH
GAAP
Revvity, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES (1)
Revvity
Three Months Ended
December
31, 2023
Organic revenue growth: Reported revenue growth from
continuing operations
-6%
Less: effect of foreign exchange rates
1%
Less: effect of acquisitions including purchase accounting
adjustments and impact of divested businesses
0%
Organic revenue growth from continuing operations
-7%
Less: effect of COVID products
-4%
Non-COVID organic revenue growth from continuing operations
-3%
Life Sciences
Three Months Ended
December
31, 2023
Organic revenue growth: Reported revenue growth from
continuing operations
-8%
Less: effect of foreign exchange rates
1%
Less: effect of acquisitions including purchase accounting
adjustments and impact of divested businesses
0%
Organic revenue growth from continuing operations
-9%
Diagnostics
Three Months Ended
December
31, 2023
Organic revenue growth: Reported revenue growth from
continuing operations
-4%
Less: effect of foreign exchange rates
1%
Less: effect of acquisitions including purchase accounting
adjustments and impact of divested businesses
0%
Organic revenue growth from continuing operations
-6%
Less: effect of COVID products
-8%
Non-COVID organic revenue growth from continuing operations
3%
(1) amounts may not sum due to
rounding
Revvity, Inc. and Subsidiaries
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES (1)
Revvity
Twelve Months Ended
December
31, 2023
Organic revenue growth: Reported revenue growth from
continuing operations
-17%
Less: effect of foreign exchange rates
0%
Less: effect of acquisitions including purchase accounting
adjustments and impact of divested businesses
0%
Organic revenue growth from continuing operations
-16%
Less: effect of COVID products
-19%
Non-COVID organic revenue growth from continuing operations
2%
Life Sciences
Twelve Months Ended
December
31, 2023
Organic revenue growth: Reported revenue growth continuing
operations
0%
Less: effect of foreign exchange rates
0%
Less: effect of acquisitions including purchase accounting
adjustments and impact of divested businesses
0%
Organic revenue growth from continuing operations
0%
Diagnostics
Twelve Months Ended
December
31, 2023
Organic revenue growth: Reported revenue growth continuing
operations
-28%
Less: effect of foreign exchange rates
-1%
Less: effect of acquisitions including purchase accounting
adjustments and impact of divested businesses
0%
Organic revenue growth from continuing operations
-27%
Less: effect of COVID products
-32%
Non-COVID organic revenue growth from continuing operations
5%
(1) amounts may not sum due to
rounding
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with GAAP.
However, management believes that, in order to more fully
understand our short-term and long-term financial and operational
trends, investors may wish to consider the impact of certain
non-cash, non-recurring or other items, which result from facts and
circumstances that vary in frequency and impact on continuing
operations. Accordingly, we present non-GAAP financial measures as
a supplement to the financial measures we present in accordance
with GAAP. These non-GAAP financial measures provide management
with additional means to understand and evaluate the operating
results and trends in our ongoing business by adjusting for certain
non-cash expenses and other items that management believes might
otherwise make comparisons of our ongoing business with prior
periods more difficult, obscure trends in ongoing operations, or
reduce management's ability to make useful forecasts. Management
believes these non-GAAP financial measures provide additional means
of evaluating period-over-period operating performance. In
addition, management understands that some investors and financial
analysts find this information helpful in analyzing our financial
and operational performance and comparing this performance to our
peers and competitors.
We use the term “adjusted revenue” to refer to GAAP revenue,
including purchase accounting adjustments for revenue from
contracts acquired in acquisitions that will not be fully
recognized due to accounting rules. We use the related term
“adjusted revenue growth” to refer to the measure of comparing
current period adjusted revenue with the corresponding period of
the prior year.
We use the term “organic revenue” to refer to GAAP revenue,
excluding the effect of foreign currency changes and revenue from
recent acquisitions and divestitures and including purchase
accounting adjustments for revenue from contracts acquired in
acquisitions that will not be fully recognized due to accounting
rules. We use the related term “organic revenue growth” to refer to
the measure of comparing current period organic revenue with the
corresponding period of the prior year. We use the related term
“non-COVID organic revenue growth” to refer to the measure of
comparing current period organic revenue excluding revenue from
COVID related products and services with the corresponding period
of the prior year excluding revenue from COVID related products and
services.
We use the term “adjusted gross margin” to refer to GAAP gross
margin, excluding amortization of intangible assets and inventory
fair value adjustments related to business acquisitions, asset
impairments, and including purchase accounting adjustments for
revenue from contracts acquired in acquisitions that will not be
fully recognized due to business combination accounting rules. We
use the related term “adjusted gross margin percentage” to refer to
adjusted gross margin as a percentage of adjusted revenue.
We use the term “adjusted SG&A expense” to refer to GAAP
SG&A expense, excluding amortization of intangible assets,
purchase accounting adjustments, acquisition and
divestiture-related expenses, significant litigation matters and
settlements, asset impairments, and significant environmental
charges. We use the related term “adjusted SG&A percentage” to
refer to adjusted SG&A expense as a percentage of adjusted
revenue.
We use the term “adjusted R&D expense” to refer to GAAP
R&D expense, excluding amortization of intangible assets and
purchase accounting adjustments. We use the related term “adjusted
R&D percentage” to refer to adjusted R&D expense as a
percentage of adjusted revenue.
We use the term “adjusted net interest and other expense” to
refer to GAAP net interest and other expense, excluding adjustments
for mark-to-market accounting on post-retirement benefits, changes
in foreign exchange and interest associated with acquisitions and
divestitures, changes in the value of financial securities and debt
extinguishment costs.
We use the term “adjusted operating income” to refer to GAAP
operating income, including revenue from contracts acquired in
acquisitions that will not be fully recognized due to accounting
rules, and excluding amortization of intangible assets, other
purchase accounting adjustments, acquisition and
divestiture-related expenses, significant litigation matters and
settlements, significant environmental charges, asset impairments,
and restructuring and other charges. We use the related terms
“adjusted operating profit percentage,” “adjusted operating profit
margin,” or “adjusted operating margin” to refer to adjusted
operating income as a percentage of adjusted revenue.
We use the term “adjusted earnings per share,” or “adjusted
EPS,” to refer to GAAP earnings per share, including revenue from
contracts acquired in acquisitions that will not be fully
recognized due to accounting rules, and excluding discontinued
operations, amortization of intangible assets, debt extinguishment
costs, other purchase accounting adjustments, acquisition and
divestiture-related expenses, significant litigation matters and
settlements, significant environmental charges, changes in the
value of financial securities, disposition of businesses and
assets, net, changes in foreign exchange and interest associated
with acquisitions and divestitures, asset impairments and
restructuring and other charges. We also exclude adjustments for
mark-to-market accounting on post-retirement benefits, therefore
only our projected costs have been used to calculate this non-GAAP
measure. We also adjust for any tax impact related to the above
items and exclude the impact of significant tax events.
We use the term “adjusted earnings per share from continuing
operations” to refer to GAAP earnings per share from continuing
operations, including revenue from contracts acquired in
acquisitions that will not be fully recognized due to accounting
rules, amortization of intangible assets, debt extinguishment
costs, other purchase accounting adjustments, acquisition and
divestiture-related expenses, significant litigation matters and
settlements, significant environmental charges, changes in the
value of financial securities, disposition of businesses and
assets, net, changes in foreign exchange and interest associated
with acquisitions and divestitures, asset impairments and
restructuring and other charges. We also exclude adjustments for
mark-to-market accounting on post-retirement benefits, therefore
only our projected costs have been used to calculate this non-GAAP
measure. We also adjust for any tax impact related to the above
items and exclude the impact of significant tax events.
Management includes or excludes the effect of each of the items
identified below in the applicable non-GAAP financial measure
referenced above for the reasons set forth below with respect to
that item:
- Amortization of intangible
assets—purchased intangible assets are amortized over their
estimated useful lives and generally cannot be changed or
influenced by management after the acquisition. Accordingly, this
item is not considered by management in making operating decisions.
Management does not believe such charges accurately reflect the
performance of our ongoing operations for the period in which such
charges are incurred.
- Debt extinguishment costs—we incur
costs and income related to the extinguishment of debt; including
make-whole payments to debt holders, accelerated amortization of
debt fees and discounts, and expense or income from hedges to lock
in make-whole payments. We exclude the impact of these items from
our non-GAAP measures because we believe they do not reflect the
performance of our ongoing operations.
- Revenue from contracts acquired in
acquisitions that will not be fully recognized due to accounting
rules—accounting rules require us to account for the fair
value of revenue from contracts assumed in connection with our
acquisitions. As a result, our GAAP results reflect the fair value
of those revenues, which is not the same as the revenue that
otherwise would have been recorded by the acquired entity. We
include such revenue in our non-GAAP measures because we believe
the fair value of such revenue does not accurately reflect the
performance of our ongoing operations for the period in which such
revenue is recorded.
- Other purchase accounting
adjustments—accounting rules require us to adjust various
balance sheet accounts, including inventory, fixed assets and
deferred rent balances to fair value at the time of the
acquisition. As a result, the expenses for these items in our GAAP
results are not the same as what would have been recorded by the
acquired entity. Accounting rules also require us to estimate the
fair value of contingent consideration at the time of the
acquisition, and any subsequent changes to the estimate or payment
of the contingent consideration and purchase accounting adjustments
are charged to expense or income. We exclude the impact of any
changes to contingent consideration from our non-GAAP measures
because we believe these expenses or benefits do not accurately
reflect the performance of our ongoing operations for the period in
which such expenses or benefits are recorded.
- Acquisition and divestiture-related
expenses—we incur legal, due diligence, stay bonuses,
incentive awards, stock-based compensation, interest, foreign
exchange gains and losses, integration expenses, rebranding
expenses, and other costs related to acquisitions and divestitures.
We exclude these expenses from our non-GAAP measures because we
believe they do not reflect the performance of our ongoing
operations.
- Asset impairments—we incur expense
related to asset impairments. Management does not believe such
charges accurately reflect the performance of our ongoing
operations for the periods in which such charges were
incurred.
- Restructuring and other
charges—restructuring and other charges consist of employee
severance, other exit costs as well as the cost of terminating
certain lease agreements or contracts as well as costs associated
with relocating facilities. Management does not believe such costs
accurately reflect the performance of our ongoing operations for
the period in which such costs are reported.
- Adjustments for mark-to-market accounting
on post-retirement benefits—we exclude adjustments for
mark-to-market accounting on post-retirement benefits, and
therefore only our projected costs are used to calculate our
non-GAAP measures. We exclude these adjustments because they do not
represent what we believe our investors consider to be costs of
producing our products, investments in technology and production,
and costs to support our internal operating structure.
- Significant litigation matters and
settlements—we incur expenses related to significant
litigation matters, including the costs to settle or resolve
various claims and legal proceedings. Management does not believe
such charges accurately reflect the performance of our ongoing
operations for the periods in which such charges were
incurred.
- Significant environmental
charges—we incur expenses related to significant
environmental charges. Management does not believe such charges
accurately reflect the performance of our ongoing operations for
the periods in which such charges were incurred.
- Disposition of businesses and assets,
net—we exclude the impact of gains or losses from the
disposition of businesses and assets from our adjusted earnings per
share. Management does not believe such gains or losses accurately
reflect the performance of our ongoing operations for the period in
which such gains or losses are reported.
- Impact of foreign currency changes on the
current period—we exclude the impact of foreign currency
associated with acquisitions and divestitures from these measures
by using the prior period’s foreign currency exchange rates for the
current period because foreign currency exchange rates are subject
to volatility and can obscure underlying trends.
- Impact of significant tax
events—we exclude the impact of significant tax events, such
as the Tax Cuts and Jobs Act of 2017. Management does not believe
the impact of significant tax events accurately reflects the
performance of our ongoing operations for the periods in which the
impact of such events was recorded.
- Changes in value of financial
securities—we exclude the impact of changes in the value of
financial securities. Management does not believe such gains or
losses accurately reflect the performance of our ongoing operations
for the period in which such gains or losses are reported.
- Depreciation of fixed assets ceased upon
reporting the business as held for sale—we exclude the
impact of ceasing depreciation of fixed assets that are held for
sale. Management does not believe such charges accurately reflect
the performance of our ongoing operations for the periods in which
such expenses were ceased.
The tax effect for discontinued operations is calculated based
on the authoritative guidance in the Financial Accounting Standards
Board’s Accounting Standards Codification 740, Income Taxes. The
tax effect for amortization of intangible assets, inventory fair
value adjustments related to business acquisitions, changes to the
fair values assigned to contingent consideration, debt
extinguishment costs, other costs related to business acquisitions
and divestitures, significant litigation matters and settlements,
significant environmental charges, changes in the fair value of
financial securities, adjustments for mark-to-market accounting on
post-retirement benefits, disposition of businesses and assets,
net, restructuring and other charges, and the revenue from
contracts acquired with various acquisitions is calculated based on
operational results and applicable jurisdictional law, which
contemplates tax rates currently in effect to determine our tax
provision. The tax effect for the impact from foreign currency
exchange rates on the current period is calculated based on the
average rate currently in effect to determine our tax
provision.
The non-GAAP financial measures described above are not meant to
be considered superior to, or a substitute for, our financial
statements prepared in accordance with GAAP. There are material
limitations associated with non-GAAP financial measures because
they exclude charges that have an effect on our reported results
and, therefore, should not be relied upon as the sole financial
measures by which to evaluate our financial results. Management
compensates and believes that investors should compensate for these
limitations by viewing the non-GAAP financial measures in
conjunction with the GAAP financial measures. In addition, the
non-GAAP financial measures included in this earnings announcement
may be different from, and therefore may not be comparable to,
similar measures used by other companies.
Each of the non-GAAP financial measures listed above is also
used by our management to evaluate our operating performance,
communicate our financial results to our Board of Directors,
benchmark our results against our historical performance and the
performance of our peers, evaluate investment opportunities
including acquisitions and discontinued operations, and determine
the bonus payments for senior management and employees.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240201390669/en/
Investor Relations: Steve Willoughby
steve.willoughby@revvity.com
Media Contact: Fara Goldberg (781) 663-5699
fara.goldberg@revvity.com
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