Revvity(RVTY) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements The unaudited financial statements for the period ended June 30, 2024, show a slight decrease in total revenue compared to the prior year, primarily due to a decline in the Life Sciences segment, with net income from continuing operations increasing while total net income saw a significant decrease due to a large gain on sale of discontinued operations in the prior year, maintaining a strong balance sheet with total assets of $13.4 billion and significantly improved cash flow from operations Condensed Consolidated Statements of Operations For the second quarter of 2024, Revvity reported total revenues of $691.7 million, a 2.5% decrease year-over-year, with operating income from continuing operations increasing to $85.7 million from $78.1 million in the prior-year quarter, and net income at $55.4 million, or $0.45 per diluted share, compared to $35.6 million, or $0.28 per diluted share, in Q2 2023, while the significant year-over-year decrease in six-month net income is primarily due to the large gain from discontinued operations recorded in 2023 Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $691,685 | $709,066 | $1,341,605 | $1,383,931 | | Operating Income from Continuing Operations | $85,724 | $78,056 | $129,840 | $154,175 | | Income from Continuing Operations | $72,606 | $58,622 | $101,302 | $83,467 | | Net Income | $55,360 | $35,559 | $81,373 | $605,034 | | Diluted EPS (Net Income) | $0.45 | $0.28 | $0.66 | $4.80 | - Cash dividends declared per common share remained constant at $0.07 for the quarter and $0.14 for the six-month period, year-over-year[6] Condensed Consolidated Balance Sheets As of June 30, 2024, Revvity's balance sheet showed total assets of $13.42 billion, a slight decrease from $13.56 billion at year-end 2023, with cash and cash equivalents increasing significantly to $1.25 billion, total liabilities decreasing to $5.55 billion, and total stockholders' equity remaining stable at $7.87 billion Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,248,120 | $913,163 | | Total Current Assets | $3,158,689 | $3,001,091 | | Goodwill | $6,496,971 | $6,533,550 | | Total Assets | $13,424,849 | $13,564,665 | | Total Liabilities | $5,554,535 | $5,691,926 | | Total Stockholders' Equity | $7,870,314 | $7,872,739 | Condensed Consolidated Statements of Cash Flows For the first six months of 2024, net cash provided by operating activities was $306.2 million, a significant improvement from a net use of $71.9 million in the same period of 2023, with net cash provided by investing activities at $103.3 million, compared to $1.29 billion in the prior year which included large proceeds from the sale of a business, and net cash used in financing activities decreasing to $61.5 million from $341.5 million, primarily due to reduced share repurchases Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $306,184 | $(71,856) | | Net cash provided by investing activities | $103,310 | $1,293,461 | | Net cash used in financing activities | $(61,508) | $(341,458) | | Net increase in cash, cash equivalents and restricted cash | $335,055 | $862,576 | Notes to Condensed Consolidated Financial Statements Key notes detail the sale of the Applied, Food and Enterprise Services businesses, which are now reported as discontinued operations, with revenue disaggregated by segment and geography showing a decline in Life Sciences and growth in Diagnostics, and the company detailing its debt structure, including notes due in 2024, and its active stock repurchase program, while Goodwill and intangible assets remain significant at over $9.3 billion combined - In March 2023, the Company completed the sale of its Applied, Food and Enterprise Services businesses, which are now reported as discontinued operations[20] Revenue by Segment - Q2 (in thousands) | Segment | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Life Sciences | $313,847 | $336,353 | -6.7% | | Diagnostics | $377,838 | $372,713 | +1.4% | - The company repurchased $25.8 million of common stock in the first six months of 2024, with $329.6 million remaining available under the current repurchase program[43] - As of June 30, 2024, Goodwill was $6.5 billion and Net Intangible Assets were $2.8 billion[49][51] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 2% overall revenue decline in Q2 2024 to a 7% decrease in the Life Sciences segment, driven by market headwinds, which was partially offset by 1% growth in the Diagnostics segment, with gross margins slightly decreasing due to lower volume and higher material costs, but operating margins improving from 11% to 12% due to cost containment, and the company maintaining strong liquidity with $1.25 billion in cash and $1.5 billion in available credit, planning to use proceeds from its recent major divestiture for debt repayment, share repurchases, and strategic acquisitions Consolidated Results of Continuing Operations Total revenue for Q2 2024 decreased by 2% to $691.7 million, including a 1% unfavorable impact from foreign exchange, with the decline driven by Life Sciences while Diagnostics showed modest growth, and gross margin falling by 101 basis points to 55.7% due to lower volume and higher material costs, though partially offset by pricing and productivity, while SG&A expenses decreased by 6%, and R&D expenses fell by 16%, reflecting cost containment initiatives - Q2 2024 revenue decreased 2% YoY to $691.7 million, reflecting a 7% decrease in Life Sciences and a 1% increase in Diagnostics[82] - Q2 2024 gross margin decreased by 101 basis points to 55.7% from 56.7% in Q2 2023, primarily due to lower sales volume and increased material costs[84] - SG&A expenses decreased 6% in Q2 2024, and R&D expenses decreased 16%, both driven by cost containment and productivity initiatives[86][89] Reporting Segment Results of Continuing Operations The Life Sciences segment's Q2 revenue fell 7% to $313.8 million, with operating margin decreasing 217 basis points due to lower volume and unfavorable mix, while the Diagnostics segment's Q2 revenue grew 1% to $378.0 million, driven by immunodiagnostics and reproductive health, leading to a 304 basis point increase in operating margin from higher volume and cost control Q2 2024 Segment Performance vs. Q2 2023 | Segment | Revenue | Revenue Change | Operating Income | Operating Income Change | | :--- | :--- | :--- | :--- | :--- | | Life Sciences | $313.8M | -7% | $112.4M | -12% | | Diagnostics | $378.0M | +1% | $97.9M | +15% | - The Life Sciences revenue decrease was driven by declines in reagents ($15.4 million) and instruments ($13.8 million), partially offset by growth in software ($6.7 million)[96] - The Diagnostics revenue increase was driven by growth in immunodiagnostics ($12.4 million) and reproductive health ($0.6 million), partially offset by a decline in applied genomics ($7.8 million)[99] Liquidity and Capital Resources The company maintains a strong liquidity position with $1.25 billion in cash and equivalents and $1.5 billion available under its revolving credit facility as of June 30, 2024, with cash from operations expected to fund operating expenses, capital expenditures, and dividends, and the company intending to use proceeds from the 2023 business sale for debt maturities, share repurchases, and strategic acquisitions, holding $706.1 million in U.S. treasury securities earmarked to repay notes due in September 2024 - As of June 30, 2024, the company had $1,248.1 million in cash and cash equivalents and $1.5 billion of borrowing capacity under its senior unsecured revolving credit facility[106] - The company holds $706.1 million in U.S. treasury securities intended to repay its 0.850% Senior Unsecured Notes due in September 2024[106][117] - Under its $600 million stock repurchase program, the company repurchased $25.8 million of stock in the first six months of 2024, with $329.6 million remaining available[107] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks, primarily from changes in foreign currency exchange rates and interest rates, and uses derivative instruments to manage volatility related to these exposures, stating that its market risks have not materially changed from the disclosures in its 2023 Form 10-K - The company's primary market risks are foreign currency exchange risk and interest rate risk[121] - The company's debt portfolio is primarily fixed-rate, but it has $1.25 billion in cash and cash equivalents subject to variable interest rates[122] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2024, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective at the reasonable assurance level[123] - No changes were identified during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[124] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is subject to various legal proceedings and investigations in the ordinary course of business, with management establishing accruals for probable and estimable losses and believing that the total cost of resolving these matters will not have a material adverse effect on its financial statements - The company states that the total cost of resolving current legal contingencies is not expected to have a material adverse effect on its condensed consolidated financial statements[126] Item 1A. Risk Factors The company outlines several risk factors that could impact its business, including dependence on global economic conditions and government funding, the need for timely new product introductions in a competitive, technologically evolving market, and potential disruptions in the supply chain for critical raw materials, with other significant risks involving the successful integration of acquisitions, protection of intellectual property, compliance with extensive government regulations (including FDA and data privacy laws), reliance on information technology systems, and managing a substantial debt load - Business operations are at risk from declines in customer markets, unfavorable changes in government regulations or funding, and general economic conditions[127] - Failure to introduce new products in a timely manner in a technologically competitive industry could lead to loss of market share[130] - The company faces risks related to supply chain disruptions, particularly for critical components from limited or single-source suppliers[139] - A significant disruption or security breach of IT systems could adversely affect business, and failure to realize the full value of $9.3 billion in intangible assets could harm results[141][144] - The company's substantial debt could impact future financing and limit expenditures, while restrictive covenants in debt instruments may limit business activities[160][162] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2024, the company repurchased a total of 196,106 shares of its common stock for an aggregate cost of approximately $20.1 million, including 188,532 shares repurchased for $19.3 million under its publicly announced stock repurchase program, with $329.6 million remaining available for future repurchases as of June 30, 2024 Issuer Repurchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Avg. Price Paid | Shares Purchased (Public Plan) | Remaining Authorization | | :--- | :--- | :--- | :--- | :--- | | Q2 2024 Total | 196,106 | $102.35 | 188,532 | $329,615,266 | - The company's Board authorized a $600 million stock repurchase program on April 27, 2023, which expires on April 26, 2025[167] Item 5.Other Information During the second quarter of 2024, two executive officers, CEO Prahlad Singh and SVP Tajinder S. Vohra, adopted Rule 10b5-1 trading plans for future sales of company stock, and Mr. Singh terminated a previously adopted Rule 10b5-1 plan from February 2024 - CEO Prahlad Singh and SVP Tajinder S. Vohra adopted Rule 10b5-1 trading arrangements during the quarter[169][170] - On April 9, 2024, CEO Prahlad Singh terminated a Rule 10b5-1 trading plan that had been adopted on February 29, 2024[171] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications as required by the Sarbanes-Oxley Act, and the Inline XBRL documents containing the detailed financial data - Exhibits filed include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906[172] - The report includes financial statements and notes formatted in Inline XBRL (Extensible Business Reporting Language)[172]