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01/10 17:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings report shows mixed signals. While financial performance exceeded expectations with positive EPS and strong cash flow, the guidance is weak with pressure from tariffs and FX volatility. Operational measures are in place to mitigate risks, but uncertainties remain, especially in China and Life Sciences. The share repurchase program is a positive sign. However, the lack of clarity in management's responses and potential tariff impacts introduce uncertainty. Overall, the sentiment is balanced, leading to a neutral prediction for the stock price movement.
Revenue $665 million, 4% organic growth year-over-year. The growth was impacted by a 1% headwind from FX and no contribution from acquisitions.
Adjusted EPS $1.01, which is $0.07 above expectations of $0.93 to $0.95.
Adjusted Operating Margins 25.6%, up modestly year-over-year, driven by strong expense management and favorable mix.
Free Cash Flow $118 million, resulting in 97% conversion of adjusted net income.
Share Repurchase $154 million worth of shares repurchased in the quarter, with an outstanding share count of 119.4 million.
Net Debt to Adjusted EBITDA 2.4 times, with 100% of debt being fixed rate at a weighted average interest rate of 2.6%.
Adjusted Tax Rate 19.5%, lower than expectations due to favorable tax planning initiatives.
Organic Growth Outlook Reaffirmed at 3% to 5% for the year, with a slight headwind from academic customers impacting instrumentation.
Adjusted Operating Margins Outlook Expected to be in the range of 27.9% to 28.1%, down 60 basis points due to anticipated tariff-related pressures.
Adjusted EPS Outlook Expected to be in the range of $4.90 to $5 for the year.
New Product Launch: Revvity secured FDA approval for a more automated platform integrated with the T-SPOT latent TB test, enhancing productivity and clinical performance. Launched Signals One, a reimagined version of the core Signals data platform, designed to manage data across scientific workflows with new AI capabilities.
Market Expansion: Expanded alliance with Genomics England to provide DNA sequencing services for newborn screening, aiming to screen up to 100,000 newborns for rare genetic conditions.
Operational Efficiency: Achieved 97% free cash flow conversion of adjusted net income and repurchased $154 million worth of shares in Q1. Implemented proactive measures to mitigate tariff impacts, including inventory positioning and geographical manufacturing adjustments.
Strategic Shift: Reaffirmed full-year organic growth outlook of 3% to 5%, adjusting for slower demand from US academic customers but offset by stronger performance in Software and reproductive health.
Macroeconomic Environment: The company is navigating a dynamic macroeconomic environment, which has presented unforeseen challenges and uncertainties affecting business operations.
Demand Fluctuations: There has been unforeseen choppiness in demand from US academic customers, particularly impacting life science instruments, which could have led to higher organic growth if not for this change.
Tariff Impact: The current tariff situation is expected to have a gross impact of approximately $135 million on adjusted operating income this year, with a net impact anticipated to negatively affect adjusted operating margins by about 60 basis points.
Academic Funding Uncertainty: Changes in academic funding in the US have led to cautious spending behavior from academic customers, which is expected to persist until there is more clarity regarding future funding levels.
Operational Agility: The company is actively taking measures to mitigate the impact of tariffs, including inventory positioning, geographical manufacturing adjustments, and engaging alternative suppliers.
Foreign Exchange (FX) Volatility: Higher-than-expected FX volatility has slightly impacted adjusted net interest and other expenses, indicating potential risks from currency fluctuations.
Market Trends: The company acknowledges that no business is completely immune from broader end market trends and geopolitical developments, which could affect future performance.
Newborn Genomic Sequencing Alliance: Expanded alliance with Genomics England to provide DNA sequencing services for screening newborns for rare genetic conditions.
FDA Approval for T-SPOT TB Test: Secured FDA approval for an automated platform integrated with T-SPOT latent TB test, enhancing productivity and clinical performance.
Signals Software Growth: Signals Software business grew over 20% organically in Q1 2025, with expectations for continued strong growth.
Signals One Launch: Launched Signals One, a reimagined core data platform with new AI capabilities.
Tariff Mitigation Actions: Implemented actions to mitigate tariff impacts, including inventory positioning and geographical manufacturing adjustments.
Adjusted EPS Outlook: Reaffirmed adjusted EPS outlook for 2025 of $4.90 to $5.00.
Organic Growth Outlook: Reaffirmed organic growth outlook for 2025 of 3% to 5%.
Revenue Guidance: Expected revenue range for 2025 is $2.83 billion to $2.87 billion.
Adjusted Operating Margins: Adjusted operating margins expected to be in the range of 27.9% to 28.1%.
Q2 2025 Revenue Guidance: Expected Q2 revenue in the range of $700 million to $715 million.
Q2 2025 Adjusted EPS Guidance: Expected adjusted EPS for Q2 in the range of $1.13 to $1.15.
Share Repurchase Program: In Q1 2025, Revvity repurchased $154 million worth of shares, resulting in a total of over 7 million shares repurchased over the last two years, representing a 6% decline in total shares outstanding since mid-2023.
The earnings call indicates a mixed outlook: while there are positive aspects such as strong software performance and a stable tax rate, challenges in China and revised growth forecasts temper enthusiasm. The Q&A reveals cautious optimism, especially with expected recovery in diagnostics and software, but management's unclear responses on AI and new product contributions suggest uncertainty. Overall, the sentiment is balanced, reflecting both potential and risks, leading to a neutral rating.
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