Q1 2021 PerkinElmer Inc Earnings Call
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Good day, and thank you for standing by and welcome for the Q1 2021 Perkin Elmer earnings conference call. At this time all participant lines are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised that today's conference is being recorded to ask a question during the session you will need.
Press Star one on your telephone if you require any further assistance. Please press star zero.
Now I'd like to hand, the conference over to your Speaker today, Bryan Kipp, Vice President of Investor Relations. Please go ahead.
Thank you operator, good afternoon, and welcome to the Perkin Elmer first quarter 2021 earnings Conference call with me on the call today are prolonged thing President and Chief Executive Officer.
And Jamey mock senior Vice President and Chief Financial Officer.
You have not received a copy of our earnings press release, you may get one from the investors section of our website at Www Dot Perkin Elmer Dot com.
Please note this call is being webcast live and will be archived on our website until may 18th 2021.
Before we begin we need to remind everyone of the safe Harbor statements that we've outlined in our earnings press release issued earlier. This afternoon and also those in our SEC filings statements or comments made on this call may be forward looking statements, which may include but are not necessarily limited to financial projections or other statements.
For the company's plans objectives expectations or intentions. These matters involve certain risks and uncertainties. The company's actual results may differ significantly from those projected or suggested by any forward looking statements due to a variety of factors, which are disclosed in detail in our SEC filings.
Any forward looking statements made today represent our views as only up today, we disclaim any obligation to update forward looking statements in the future even if our estimates change.
You should not rely on any of today's forward looking statements as representing our views as of any date after today.
During this call we will be referring to certain non-GAAP financial measures a reconciliation of the non-GAAP financial measures. We plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release.
For the extent, we use non-GAAP financial measures. During this call that are not reconciled to GAAP in that attachment. We will provide reconciliations promptly I am now pleased to introduce the president and Chief Executive Officer of Perkin Elmer for lot Singh for lot.
Thank you Bryan and good afternoon, everyone.
I'd like to begin by welcoming Steve Willoughby as our new Vice President of Investor Relations.
We are excited to have him join the team he brings a wealth of industry knowledge deep research and analyst experience.
And as many of you know Steve industry surveys always seem to have a real time finger on the pulse of market trends.
We are looking forward to his insights and expertise as we continue to grow and transform <unk>.
Into a best in class life Sciences, and diagnostics organization.
Stepping back.
So it is a cliche, but we are living in a new one compared to 12 months ago.
2020 was one of the most dynamic years in my career.
And I suspect you are too.
It felt like we were living in rolling four week periods.
Success was a byproduct of teamwork agility.
And quite frankly little has changed in that regard during the first four months of 2021.
While our core markets are improving COVID-19.
It continues to keep us on our toes.
Two things are for stocking.
Our team is tested.
The first quarter performance reinforces that broken out among top to bottom is there margin from COVID-19 as a stronger organization.
We've shown we can and will respond quickly to whatever challenges are thrown our way.
A rallying cry of putting the customer first and our mission of innovating for a healthier world resonates and passion of our team.
We shine throughout 2020, and our resiliency customer first mindset and team first culture will continue to differentiate us in 2021 and beyond.
I've said it countless times over the past year.
But I remain incredibly appreciative of and inspired by the entire poking at my team for.
For continuing to demonstrate the kind of dedication agility.
Collaboration and genuine compassion for one another and the world around us.
Make booking a world class organization.
Our recent commercial and financial success is really a byproduct of the team's commitment to driving our mission day in and out.
And I could not be prouder.
Turning to the first quarter results broken down mode delivered an outstanding financial performance.
Adjusted and organic revenue grew by 101% 92% respectively.
Adjusted earnings per share increased 455%.
And we delivered 114% adjusted free cash flow conversion.
Jeremy will go into further detail around the broad based momentum we experienced across the portfolio.
But overall it was a strong start to the year.
And we are encouraged by the underlying recovery, we are seeing across most of our core end markets.
The new book, an element that is emerging from the COVID-19 pandemic is a direct byproduct of the conscious execution against our four strategic priorities.
People customers innovation and operational excellence.
I know in many ways, the playbook sounds simple, but going back to the basics has truly reinvigorated our organization.
On the people front, we made progress in several areas over the course of per quarter.
Magazine for was promoted to become a force chief people and culture officer to accelerate the transformation of our culture and talent engagement efforts.
Near term Maggie and her team will be laser focused on reinforcing our foundation instituting getting beyond what programs and bolstering booking almost profile as a destination of choice for top talent.
Specific to learning and development, we recently launched the Perkin Elmer leadership Academy and.
And invested in external tools and resources to better engage employees of all levels in their own professional growth.
Additionally, we are increasingly holding managers accountable for employee engagement.
Tracking and managing goals and objectives and maintaining close contact even in remote environments with teams and direct reports is pivotal to individual development as well as ensuring that we are empowering our next generation of leaders.
On the diversity equity and inclusion from <unk>.
We recently established an infusion board and identified over 100 infusion champions around the world.
The immediate focus of the team has been to execute on both global and local dei efforts.
One Great example was spearheading the creation of a moving video montage to owner International Women's day.
Looking outward we continue to reposition the portfolio and accelerate momentum through increased.
Investments in innovation.
On the COVID-19 from the explorer workstation remains a differentiator for Perkin Elmer.
Customers love, the Streamlet workflow and ability to rapidly toggle throughput based on real time demand dynamics.
The best in class nature of the platform is further reinforced by the fact that the competitive tender win rate has remained very north of 90%.
Since the platform was launched last August.
Additionally.
We were proud to receive an EUA from the FDA during the quarter to test for asymptomatic individuals.
We anticipate that COVID-19 surveillance testing will remain important for the foreseeable future.
And largely target asymptomatic carriers as economies across the globe reopen.
Okay network continues to be uniquely positioned to health in the March towards normalization.
As we are one of the few suppliers to have an EUA for asymptomatic testing.
Maintain the most sensitive PCR and rapid tests on the market and have end to end capabilities to promote pool testing, which saves time and resources for diagnostic laboratory.
Outside of COVID-19, our life Sciences team introduced a groundbreaking cell painting it as part of the new portfolio of female view cellular imaging reagents.
Sell painting is a powerful high content screening approach, which combines cell and computational biology to unravel cellular responses.
But this new and novel workflow researchers will be able to better understand diseases and develop more pinpointed therapies to treat them.
Additionally.
These reagents for recently approved for use by the jump sell painting consortium.
Which includes many of the top global pharmaceutical companies as well as the broad Institute.
Meanwhile, our recently acquired Horizon discovery business had an exciting announcement of their own during the quarter.
The team launched a new family of CRISPR modulation reagents for CRISPR interference.
ASP awry.
CRISPR is CRISPR without the cut.
Which allows researchers to repress.
Rather than completely knock out a gene.
Allowing for more nuanced research.
Researchers will have the flexibility to repress genes and almost all cell lines.
Any length of time and net any scale from single gene readout to high throughput studies.
From a customer standpoint, we continued to execute on expanding existing partnerships.
As well as forging new relationships.
During the first quarter, we were selected as the largest supplier and a sizable tender with the Yunnan province, CBC to support environmental and food safety testing.
In total <unk>.
70 bucket instruments will be distributed to 90 minutes capacities, and 45 county level technical centers to improve testing and only warning capabilities around hazardous ingredients.
The win was a seminal event for our new LTE 300, you HPLC franchise.
As it is the largest order to date for the platform, which approximately is 20 systems.
Yeah.
Vance. This is another great example of very force, new and exciting relationships.
We added several new customers in both Europe and North America.
And we established the first round of this lab and India.
We will provide more substantive updates on validus in due time.
But with a strong funnel and growing pipeline.
Platform is in margin from COVID-19 in a great position to expedience accelerating momentum over the next several quarters.
As I said earlier in my prepared remarks, the new parking arrangement that is emerging from COVID-19 is on a much stronger footing than two years ago.
The addition of Horizon discovery Omni and most recently, Oxford immuno Tech further bolsters our position.
While in organic contributors during the first quarter. These three assets combined grew over 25% year over year.
But more importantly, all true carve out new niches in high growth areas, where we see significant opportunity in the future.
Specifically the horizon discovery integration is proceeding very well.
The team executed phenomenally during the quarter.
Both commercial teams are actively engaged and driving some older commercial wins.
And horizon has already begun to leverage internal parking animal automation capabilities to scale their automated screening and cell line engineering efforts.
Meanwhile.
Omni International Homogenization products are highly complementary with poking at most applied genomics portfolio.
Omnis be mill technology has been a critical component and poke into the most differentiated COVID-19 saliva test workflow.
And it also has the potential to enhance our end to end workflows and the food and cannabis markets.
Lastly, while.
We are only a couple of months into the Oxford immuno Tech integration efforts.
Visibility on both revenue and cost synergy opportunities continues to improve.
The team has quickly executed on several small all evens out of the gate and the progress on the automation rollout is already having an impact on new account wins.
In closing I could not be more excited about the future for Perkin Elmer.
The organization is ego and energized to build on our recent momentum.
We have fundamentally transformed ourselves and we are undoubtedly better positioned to capture the opportunities of tomorrow.
We are stronger in core markets, where we have a right to win success.
Successfully leveraging our scale to deliver novel solutions to the market.
And proactively investing to further augment our portfolio and expand into faster growing markets.
We are not going to take our foot off the gas.
The second quarter is shaping up to be another outstanding quarter with 29% organic growth.
And we are well positioned to grow faster on both our core and COVID-19 businesses in 2021 day.
And we guided a quarter ago.
And to that point I'm excited to announce that we plan to delve further into what has been going on behind the scenes at Perkin Elmer.
During our upcoming analyst day on June 24.
I encourage everyone to go to the investors section of our website after the call to pre register.
Before I turn the call over to Jamie I wanted to take a moment and comment on the devastating COVID-19 situation in India.
But just taking the lives of thousands every day.
Having been born in India, and working for a company that employs over 2000 locally in that country.
The severity of the present situation truly hits home.
At Perkin Elmer V.
We feel that it is our role as a global citizen to do everything we can to help both our employees and the country.
We have joined other U S companies and engaged government officials, both in the U S and India to provide widely goods and services.
Locally our team in India is working around the clock to assist our employees in every possible way.
<unk> Organising vaccination drives providing testing support and seeking to facilitate meeting their origin medical needs.
While many people are eagerly looking to transition to a post COVID-19 world.
Countless others around the globe are still struggling daily with the pandemic and its deadly impact.
My heart and prayers go out to everyone, who are still acutely dealing with the pandemic daily.
And I promise that at Pocono Tomorrow, you will continue to tirelessly support afflicted regions and countries and their efforts to combat COVID-19, and flatten the curve.
Yeah.
Jamie.
Thanks, a lot and good evening, everyone to start I echo prolonged and welcoming Steve Willoughby as our new Vice President of Investor Relations, Steve has been a terrific research analysts over the past decade, plus but more importantly, he is a great person and I've thoroughly enjoyed getting to know him over the last few years I have no doubt that he will be an invaluable addition.
And to the Perkin Elmer family.
Before turning to the financial results I wanted to remind everyone that our first quarter earnings call presentation has been posted on the investors section of our website under financial information.
I will begin my prepared remarks by highlighting the first quarter.
Then I'll provide some additional color on our served end markets and financial metrics and I will end with our second quarter and updated full year 2021 guidance.
For the high level the team executed extremely well during the first quarter.
That's all I've mentioned, we are seeing signs of normalization in our core markets non.
Non COVID-19 product order growth exceeded reported revenue growth for the second quarter in a row and service level activity continued to improve on a sequential basis.
And as we look ahead, we are even more confident that we will be a faster growing company in a post COVID-19 world.
During the first quarter adjusted revenue grew 101% compared to last year to $1 $3 billion and included a 3% foreign exchange and a 5% acquisition tailwind.
Organic revenue grew 92% two percentage points better than what we previously communicated.
Overall, COVID-19 related products and services contributed $550 million in the quarter propelled primarily by our PCR tests and RNA extraction solutions as well as our turnkey lab and the lab testing solutions in the state of California, and the United Kingdom.
In total excluding the impact of our labs are COVID-19 solutions contributed approximately $250 million during the quarter.
By business diagnostics, representing 65 per cent of total sales increased 227% organically.
Strength in our immuno diagnostics and applied genomics businesses led the way in our reproductive health franchise returned to growth for the first time since the fourth quarter of 2019.
Discovery and analytical solutions, representing 35 per cent of total sales increased 6% organically led by broad based growth across life Sciences food and applied.
You'll recall that during the first quarter of 2020, we benefited from an extra week.
We estimate that the revenue impact of the extra week was approximately $11 million with the vast majority of it benefiting the das business.
Normalizing for the extra week gas grew 9% on a core basis year over year.
On a geographic basis, Americas, and Europe grew triple digits Asia Pacific grew strong double digits, China grew over 50% year over year.
Operationally, we are extremely pleased with our performance adjusted operating margins expanded approximately 2600 basis points to 41% led by volume leverage business mix and productivity programs.
Adjusted earnings per share of $3.72 in the first quarter increased 455% relative to the first quarter of 2020.
Looking further into the key drivers within our segments, let's start with our diagnostics business.
Mentioned in my earlier remarks organic revenue increased 227% with all three major geographic regions growing triple digits.
Our immuno diagnostics franchise led the way posting 420% growth within non COVID-19 portfolio, increasing over 20% led by euro immune into low <unk>.
Demand for our portfolio of RT PCR COVID-19 assets remained strong and serology demand remained consistent with the past two quarters.
Meanwhile, our applied genomics business grew 330% on broad based momentum across all geographies with strength in our nucleic acid extraction liquid handling and sample prep product lines.
Automated liquid handling and nucleic acid extraction grew over 10 times and nine times, respectively versus the first quarter of 2020.
Despite ongoing concerns around the impending centralization of testing, we experienced a mid teens sequential growth in our automated liquid handling solutions led by our molecular franchise.
Customers continue to invest in expanded testing capabilities during the first quarter and the Janus brand continues to take market share.
Reproductive health increased high single digits organically driven by a rebound in clinical immuno assay and next generation sequencing testing demand.
Birth rates trends have yet to inflect, however, the easier comparisons limited the headwind on the overall reproductive health franchise exclude.
Excluding the clinical lab and sequencing businesses, the reproductive health business was flat year over year.
Turning to discovery and analytical solutions organic revenue increased 6% in the first quarter versus the same period last year.
By end market, we experienced low single digit organic revenue growth in life Science pharma biotech was up low single digits, excluding the extra week headwind pharma biotech would have been up high single digits.
Discovery and informatics grew mid teens and high single digits, respectively.
Enterprise declined high single digits adversely impacted by the extra week in our effort to improve the margin mix of this franchise.
The academic and government end market was a bit noisy this quarter.
U S and European customers have yet to fully normalize and APAC moderated sequentially.
Overall academic and government declined low single digits.
Food increased high single digits led by demand in Europe, and Asia Pacific Food safety led the way with approximately 30% growth. Despite a tough double digit comparison year over year.
Our amazing business in China rebounded extremely well growing over 70% compared to the first quarter of 2020.
Applied market demand continues to improve as well growing low double digits. During the first quarter Asia Pacific led the way with over 20% growth.
Breaking down implied further.
The environmental safety end market rebounded nicely with approximately 30% growth driven by European and Asia Pacific demand.
Industrial continued on its recovery trajectory, increasing high single digits.
Shifting to below the line items adjusted net interest and other expense for the first quarter was approximately $12 million.
Our adjusted tax rate was 21%.
Turning to the balance sheet, we finished the quarter with approximately $2 $6 billion of debt and nearly $1 billion of cash.
Adjusted free cash flow was $479 million in the quarter, which resulted in an adjusted free cash flow conversion rate of 114%.
Finally, we exited the quarter with a net debt to adjusted EBITDA ratio of approximately 0.9 times.
Down over a quarter of a turn compared to the fourth quarter of 2020.
Turning to guidance, we now anticipate full year, 2020, one revenue of $4 $37 billion embedded in this guidance, we assumed COVID-19 revenues increased 5% year over year compared to our prior guide of at least flat.
And we expect a continuation of the non COVID-19 momentum we saw in the first quarter translating to full year non COVID-19 organic growth of 11%.
These assumptions do not account for any incremental lockdowns and or any COVID-19 related disruptions.
Additionally, we are anticipating a 4% benefit from acquisitions and a 2% benefit from foreign exchange for the full year.
On the bottom line, we anticipate adjusted earnings per share of $9 40.
Which assumes approximately $60 million and adjusted interest and other expense.
Tax rate of 20% and our average diluted share count to be in the range of 112 to 113 million shares.
For the second quarter, we are forecasting adjusted revenue of approximately $1.11 billion, representing 29% organic revenue growth, including five per cent from acquisitions and 4% benefit from foreign exchange.
Embedded in this guidance is $325 million of COVID-19 related revenue and organic growth of high teens for our non COVID-19 product lines.
In terms of adjusted earnings per share guidance for the second quarter, we are forecasting $2 35.
Which assumes approximately $16 million of interest and other expenses.
21% tax rate and a diluted share count of 112 to 113 million shares.
All of this is detailed in the second to last page of our first quarter earnings presentation.
In closing, we delivered a very strong start to 2021.
No doubt, we are better positioned as an organization to drive more consistent and faster top line growth and improve shareholder returns compared to where we were a year ago.
We remain extremely excited for what is ahead for Perkin Elmer.
I cannot be prouder of our team and the effort that they've put in over the past year plus to get us to this point.
Operator at this time, we would like to open the call for questions.
And thank you.
As a reminder.
We ask that you limit yourself to one question and one follow up if anybody has any additional questions. We ask that you rejoin the queue.
To ask a question you will need to press star one on your telephone.
For all your question price per pound key please standby, while we compile the Q&A roster.
And our first question comes from Dan Leonard from Wells Fargo. Your line is now open.
Thank you. So so looking at the Q1 outperformance are you able to assess how much is it.
An elevated a greater elevated level of demand.
The durable versus maybe pent up demand.
I think you know again.
We're seeing a strong comeback from all of the markets and across the board I don't think it's as much pent up demand as the market is just coming back and it's coming back strong.
And we've seen this across all regions. So I wouldn't categorize this as pent up demand.
Okay. Thank you and my follow up per lot.
As COVID-19 testing demand starts to fade does that impact your M&A funnel at all R. R.
Power prices have any interesting assets getting more reasonable thank you.
No I would say that you know again, Dan just to remind if you look back at our track record most of the deals that we have done.
Opportunities, where we've spent a lot of time, they tend to be more strategic and more partnerships, resulting into acquisitions. So we are not really in the auction space. So it hasn't impacted that much either on the upside, but I think I would say generally if you look at the market is still very hot and in our company.
These are still that have a COVID-19 tailwind all day.
<unk> a premium.
Oh.
Thank you.
And our next question comes from day, Jay Kumar from Evercore. Your line is now open.
Hey, guys. Thanks for taking my question and not congrats on a good print here.
Give me a prolonged maybe on the guidance here.
You guys did.
10% of the base off of minus two comp.
You know I guess.
The back half implied is about high singles.
I'll get to your annual up 11%.
Now, let's see how Q1 out of the way.
<unk> of high teens, I think the implied back half is a high singles.
One is my math correct.
That's correct and I.
I think the back half comps for you know pretty easy damped down mid singles. So was there any timing element from first half second half or is this.
Perhaps some conservatism baked into the second half.
Yeah. Thanks P J.
So your math is correct to answer your first question. It is assuming high single digits in the second half I don't think theres anything to read into here for lard mentioned.
We've got and I mentioned in my prepared remarks that orders are strong they continue to be strong.
High single digits versus a little bit of an easier comparison in the second half not much to read into there.
It's a little further out so we're probably a little bit more conservative in the second half, but overall still feel very confident in the 11% plus here.
Gotcha that's helpful for.
One for you.
For the COVID-19 testing side.
This.
<unk> been a lot for nervousness around them.
How the environment around testing could change.
Quite frankly, maybe talk about the visibility that you have in the <unk>.
COVID-19 assumption in that does your annual guide.
Bacon any any upside from Andy Kidd revenues per.
Perhaps any O U S Congress if you will.
So you know James.
For the question one.
None of the antigen upside has been baked into our revenue we feel really good about our COVID-19 numbers.
For as James pointed out earlier.
Our basis is based on the fact that we have in a number of you is around asymptomatic pulling was the one that I talked about in the script.
Our new non as opportunities open up around.
Our own schools and testing with pulling that as an Avenue thats there.
The antigen testing is an avenue that is open there so.
Actually from where we sit today, we feel really good about the number and that's why we've stood by it.
Fantastic Thanks, guys.
Yeah. Thanks Richard.
And thank you and our next question comes from Doug Schenkel from.
Colin.
Your line is now open.
Hi, This is Chris on for Doug today, Thanks for taking my questions.
Jamie sorry to belabor the point, but.
For Q2 organic revenue growth guidance implies a two year stacked growth rate of 2%, which is 200 bps lower than.
What you just delivered in Q1 now I wouldn't imagine underlying demand is improving in Q2. So could you just kind of on this dynamic.
No I think Thats fair, Hey, Chris how are you doing I think as we just come into the quarter here.
Like I said I think we feel confident in the high teens guide here. It is a little lower on a stack comparison.
Nothing to read into that I would say that we are confident in the guidance, we're giving and continue to see a good outlook here.
Okay, Great and then.
For my follow up question again.
Again for you Jamie could you just unpack the free cash flow performance a bit more at that free cash flow conversion rate was very strong I'm curious how much of that was maybe onetime dynamics versus benefits you're getting from it just all the work.
You've put in improving free cash flow.
Yes, I think it's probably both Chris.
And as you mentioned and we've been really over the last two or three years put a lot of incentives a lot of processes into place to fundamentally change our free cash flow that said the first quarters normally.
One of the weakest so theres a lot going on in this particular quarter.
I would say, we pay out a lot of prior year accruals in this quarter, but the benefit that we're getting as you can see in the receivables line, we've got about $170 million free cash flow benefit there even when sales were from a sequential standpoint relatively flat.
So we did collect on a lot of the past dues that were in the fourth quarter and our DSO has improved substantially but in terms of going forward. I mean, we remain very confident in the processes, we put in place and the fact that we'll be above 85 per cent moving forward. Perhaps this year is going to be a little bit better but are there.
It's a little bit from a couple of customers that we collected on but overall I think we've got fundamental improvements in place here.
Yeah.
Thank you and our next question comes from Derik Bruin from Bank of America.
Your line is now open.
Hey, Thanks, guys. Thanks for taking the question.
Mike on for Derik.
A quick question for you for what you mentioned in your prepared remarks, and obviously tragic situation that's going on there.
Some weeks and months, but I was wondering if you could go into a little more detail on that you obviously have a relatively large exposure there because of Europe.
To it than just the legacy business.
Are you seeing anything in terms of the impact on operations.
Are you seeing.
So is it factoring into your outlook for the rest of the year, just sort of what's the latest on that.
Yes, I can say that is factored into the outlook for the second quarter. You know, we don't know how the situation and hopefully it improves in the second half Michael and I think so far given that most of what we do is India enough infectious diseases, and COVID-19 and all of that so if you haven't seen much impact because health care has been exempted.
From the lockdown, so it doesn't impact it so far.
Yeah. The only other thing Mike I mean in terms of exposure in total India is a little bit more than $100 million. So it's not as substantial exposure for any particular quarter year on year and you mentioned does not really sell a lot into India Tulip does obviously.
But it's not an enormous exposure here.
Okay. Thanks helpful and then as far as the updated COVID-19 outlook for the year you touched on the California, and you pay labs, obviously have put up for various components of the mix there.
Yeah.
I'm just curious.
As we go through the rest of the year.
How should we think about that flow through of margin because obviously as the mix shifts at some of those.
Some of the COVID-19 contribution ramped down the net impact margins in the second half of the year I guess to follow up on that is as opposed to 22, if you could give any sort of early insight into.
Margins in the model and how we should be thinking about it.
Yeah, I mean, obviously as COVID-19 ramps down it will impact our margins our margin profile here in the second half of the year, we've always been transparent about that and we remain steadfastly committed to the 23% plus that we've laid out in 2023 so.
The best way to look at it is if you look at the end of this year go back to a more normal comparison, they'll still be a little bit of COVID-19 in there there's going to be some amount of durable revenue here, but go back to the fourth quarter of 2019 and add some some growth rate for that from a non profit perspective, and we will steadily march towards 23% plus and we've got all the productivity programs in place.
To do it.
Great. Thanks, I'll get back in for Ken.
And thank you and our <unk>.
Next question comes from Tycho Peterson from Jpmorgan. Your line is now open.
Hey, thanks.
For someone dos academic download single digit yes.
Isn't that a little bit of a contrast to what we heard about from some of your peers that have talked about end markets being at or above pre pandemic levels. So can you maybe just talk a little bit on why you are seeing more pressure on the academic side and then similarly on pharma I know you talked about that being up high single digit excluding the extra week impact you know that is also kind of like in the number of opinions up double digit non pharma. So can you.
I'll touch on those dynamics, yeah, I mean, I don't think there's much to read into an academic government as you know Tycho our exposure to it is small.
So whether it's customer classification or what have you I'm not sure we have it perfectly classified between pharma biotech and academic government. So overall I would say life sciences performed better than what we expected. So you have to factor in the extra week I mentioned that discovery was up low double digits informatics was up high single digits the extra week really.
Our enterprise business. So we were quite pleased with the performance and we're pretty bullish on the outlook in life Sciences here.
Okay, and then on the COVID-19 dynamic can you just clarify what is actually in the updated guidance for the U K and labs and then just to be clear you are not including any upside from the asymptomatic cash that is that right.
So did you say U K and California Labs was your first part of your question, Yes, Yes, yes, yes, okay.
Now its just the whales lab five is still in there.
<unk> has been extended through the first quarter of 2022, it's a net.
Nominal impact per quarter.
We've got that in their California.
We've got.
Obviously, extending all are going all the way through October and we've probably taken down the run rate on that a little bit starting in the third quarter, but in general we are.
Still have a fair amount of revenue related to the COVID-19 labs overall, though tycho and generally raise COVID-19 guidance by $50 million, which was the beat that we had in the first quarter.
And the second part of your question that is asymptomatic polling that we have assumed in the guidance.
Okay.
And one last one for quite hop off net 30% growth in.
Against tough comps can you maybe just touch on that.
Moving it.
Yeah, I mentioned food safety has been strong, particularly amazing Tycho. So I think theres three factors in play over there. One is we're seeing a lot of uptick in downstream of retail from large multinationals over there that are operating in China. The second is there's some regulations around anti biotics residue and pesticide residue.
That we've won some tenders on and the third is the business is starting to export outside of China. So in general imaging I think was up 70%. It's what I said in the prepared remarks and that continues to lead the way in food safety.
Okay.
Thank you.
And our next question comes from Mac Sykes from Goldman Sachs. Your line is now open.
Thanks for the question guys.
My first question is just a little bit more general just as you mentioned your the three assets you are scaling up generate about 25% growth and I'm just wondering.
Given the free cash flow generating your balance sheet, where it is.
<unk> is scaling up additional assets over the course of the year a limiting factor for you guys. As you guys think about capital deployment or are you able to divide and conquer and staff up to and are you comfortable you can take on more.
So you know Matt good question.
The income from <unk> is that it is not a limiting factor right and it would be half.
Capital ready to deploy and we continue to actively look for opportunities.
Importantly, what we have.
And as I mentioned bolt it onto your confidence injection and then subsequently <unk>.
Tablets do you know what we are calling the integration transformation office and putting very good function in place that has allowed for seamless integration of the acquisitions that we have brought in and we hope to bring in a in this and the rest of the year. So I think you'll continue to see us be active in the M&A.
This.
Great and just my follow up just on coming back to that.
You mentioned in the presentation that you had.
Strong backlog in all three of the end markets could you provide any additional color any end market, particularly strong backlog or any particular product lines for you guys see a strong backlog developing.
I'm not sure I would point to anything that I think all three end markets look strong.
Both from the instruments and consumables perspective, I'm not sure what any one of them uptick more significantly than the other.
I think you've seen across the board, but install.
Alright, thanks, very much guys.
Yeah.
Thank you.
Next question comes from Josh Waldman from Cleveland Research. Your line is now open.
Hey, guys. Thanks for taking my question I guess going back to a question Tycho and Dan asked wondering if you could provide more context on what.
What all within the non COVID-19 business is performing better than expected to start the year.
Yes, if I right that the majority of the guidance raised in the non COVID-19 business was attributed to the first quarter beat.
No I'll take the second part.
I mean in general raising overall, 11% from our prior guide of 5% to seven has all quarters kind of rising tides here. So not just the first quarter beat.
The first quarter, we guided low single digits came in at 10.
It contributes to some of it but not all of it. So we are anticipating improved performance tissue through for you in terms of at the end markets I mean like for Lard mentioned it is across the board.
Not an end market that didnt perform better than our expectations. So maybe I'll just give a little bit more color on that when we originally guided we thought that was going to be flattish to nominal growth and we thought the ex would kind of be in the mid single digits, which kind of got us to our low singles on.
Das hitting 6% versus flattish life Sciences as I mentioned just to Tyco's question was significantly better than we kind of anticipated there.
And both food, particularly food safety, which I talked about as well as applied N. P is our triple Quad has done extremely well alright, new IR has done extremely well so all of those contributed to the beat in das.
He moved to diagnostics I would say largely immuno diagnostics and applied genomics drove the beat here. So I've mentioned in the prepared remarks that your immune did great, particularly in China. So James China, We're now above 2019 levels to up did extremely well in the quarter as well.
Applied genomics continued I would say the brand increase with Janice is attributed to COVID-19 has now started to fill true off into non COVID-19 revenue as well and then reproductive health was still a little bit better largely in genomics testing I would say so again across all end markets. We saw a significant improvement versus our original expectation and it should lie.
Throughout the year.
And then can you provide an update on the canvas business I think that was I think he said near zero in 2020 does that bounce back to 19 levels or does it remain well below that yeah. So theres no revenue in the first quarter, Josh, but I would say that the commercial activity.
Cautiously optimistic that it is up ticking again, so we've been involved in more discussions more.
Potential orders here, so hopefully starting in <unk> or certainly by the second half of the year, we will land some of the orders and revenue.
But in the first quarter. It was nothing in it right now it's immaterial in our overall guidance.
Got it thanks, guys Greg.
Thank you.
Thank you and our next question comes from Catherine Schulte from Baird. Your line is now open.
Hey, guys. This is Tom on for Catherine Congrats on a strong print.
I'm wondering if you could just get into your mix, if COVID-19 testing by geography.
Any geographic trends to call out, particularly in Europe, given some country specific COVID-19 pressures.
Okay.
Yeah, Hey, Tom.
In General I would say if you remember from last year, Europe, and Americas led the way APAC was relatively nominal in terms of overall COVID-19 and that continues to be true.
I would say the falloff in the U K moving forward versus the fourth quarter and the first quarter would obviously have an impact on EMEA and the increase in the California labs. So therefore, if you kind of move forward here those would be the two large shifts if you look at our recurring revenue basis outside of the two significant lab.
I don't think Theres any large shift I think in general all of our customers are down ticking a little bit.
But continue to place a pretty consistent level of orders with us.
But overall that shift of less CHF.
And more California will impact the overall geography geographic revenue related to COVID-19.
Yeah.
Got it and then just to follow up on China.
You know I think you said over 50% in the quarter I think that gets skewed I think last year <unk> are down somewhere in the ballpark of 30% so.
Just wanted to get a sense of.
How youre thinking about the recovery in China, any trends to call out and thoughts for the remainder of the year.
Yeah, I think as James pointed out China has come back strong and we expect it to be strong throughout the year.
Typically just to point out you don't immune China very few recall for autoimmune and allergy it was depressed last year.
Has come back strong applied genomics true is there.
Sure.
On the Das side non life Sciences.
Across the board we've seen very good a very good utilization in day, one and we expect it to keep going for the year.
Great. Thanks, guys.
Thank you.
And our next question comes from Daniel Brennan from UBS. Your line is now open.
Great. Thanks for thanks for taking the questions maybe the first one on COVID-19.
Obviously there is.
Tremendous amount of uncertainty on how this will ultimately play out this year and next but just any any sense for how we think about the durability of your business as a pandemic slows I apologize. If this was made earlier in the call, but I'm just trying to get a sense of beyond.
Beyond 2021, what kind of lasting benefit do you think Paragon will play within COVID-19 testing and then I have a follow up.
Yeah, I mean, we've talked about durability of COVID-19 going forward just based on the installed base of what we had placed it only came magic and.
And John this last year, and we continue to see that trends in the first quarter. It hasn't slowed down. So we expect that to continue to further strengthen the assumptions that we have around COVID-19 durability.
On the assumption for COVID-19 for the year, you've got a very good line of sight for the second quarter, and we are being pretty prudent in our planning for the rest of the year. So we feel very good about the number and that's why the range that QC plus.
Plus we have you know.
As Jamie talked about earlier, you have upside opportunities for those from asymptomatic from serology from antigen testing that continues to bolster our assumption and forecast it on COVID-19.
Yeah.
Got it and then and then.
And then and then maybe just within diagnostics, obviously very strong growth ex COVID-19 as well just could you speak to the overall environment.
More broadly how you know how much of that is related to Perkins specific initiatives and kind of success and how much of the overall kind of environment improving as a backdrop in diagnostics. Thank you.
Yeah, I mean, I think it's so much broader question right into the markets are opening up and if you look at reproductive health markets opened up testing as Bryan just talked again.
Fly genomics continues to be strong.
Non infectious diseases, and Youll see that autoimmune allergies have come back you know.
And in a very strong non or so across the board again for their supply genomics for reproductive health applied genomics and.
The immuno diagnostics, we've seen good strength.
<unk> health I would say is a slower coming back because of the pressure that you're seeing from both sides, but it has started showing signs.
The only thing I would add.
Largely China has been much stronger than we thought we'd come back here Dan.
Great Jami thank you.
Thank you.
And we have a follow up question from Patrick Donnelly from Citi.
Hey, guys. Thanks for taking the question.
You talked about a little better visibility into revenue and cost synergies with Oxford can you just expand that a bit just want to understand obviously you talked about the acquisitions together growing 25%, but can you just talk about the drivers specific to Oxford and the performance there.
In fact, the number one thing is it's obviously, it's a strong rebound from.
What we had seen in 2020, and we expect the testing levels to continue to exceed the 19, they've seen double digit growth in 'twenty in Q1.
The T cell piece that.
The team has launched there that they're seeing good traction already on Iran vaccine ex.
The deployment from measured immunity.
And the automation is opening up some doors with early wins. So those are the three factors I would point out.
In terms of seeing good traction for Oxford and the deal integration is going very well the teams have jive, but he wrote on lots of doors that are opening for each other in regions around the world.
Okay Gotcha and then.
Maybe just from your end market side, the industrial I talked about high single environmental low double can you just talk about the drivers there and then the sustainability as we go forward you know certainly Jamie I know you talked about how broad based strength was and it felt like every end market was better than you expected, but if you just kind of zone in on those two and just your thoughts on the go forward.
So Patrick on the industrial side I'll start there I mean, a lot of this was due to the bounce back in China. It's a lot stronger than we anticipated I would say if you look across the sub segments of industrial semiconductor across the globe continues to be the strongest.
I would say Americas is decent.
From a growth rate perspective, EMEA had a little bit of a difficult comp the first quarter of 2020 has been strong.
Yeah look I think in general, it's a steady uptick for China really bounce back more than anybody else.
I would say in environmental we see it largely in APAC and EMEA, China again for APAC for the Mayor has continued to.
To be extremely robust and Americas is still nominally positive here.
Yeah.
That's helpful. Thanks James.
Thank you and I am showing no further questions I would now like to turn the call back over to <unk> for <unk>.
<unk> remarks.
Thank you Justin and thank you all for your questions. Why is 2021 has already been a unique year and don't know if it's.
So I'm confident we have the right team and the right strategy to embrace the future and all of its possibilities.
Thank you for your interest in Parker and have a good evening.
This concludes today's conference call. Thank you for participating and you may now disconnect.
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