Q4 2021 PerkinElmer Inc Earnings Call

Speaker 1: refocusing our commercial and operating teams to the output from those changes really shining through in 2020 as the company was able to quickly and aggressively react to the challenges and opportunities presented by the pandemic.

In our commercial and operating teams to the output from those changes really shining through in 2012 as the company was able to quickly and aggressively react to the challenges and opportunities presented by the pandemic.

Speaker 1: I think that the Pokemoner of 5 or 10 years ago would not have been able to respond in such an age I law in a way to weigh as it does today.

I think that the pocket of five or 10 years ago would not have been able to respond in such an HR and a way to pay as Investor day.

Speaker 1: My leveraging are collective low-how and effort surround the globe.

By leveraging our collective knowhow and efforts around the globe.

Speaker 1: When I turn to the fact that 2021, I think it is clearly the year of portfolio transformation, especially within the lifeline.

And I turned to reflect on 2021 I think it is clearly the Europe portfolio transformation, especially within the life Sciences business.

Speaker 1: As part of this transformation, including the addition of nine businesses over the last-

As part of this transformation, including the addition of nine businesses over the last year.

Speaker 1: We are now keenly focused on successfully welcoming more than 2,000 new colleagues to the company and capitalizing on both the commercial and scientific opportunities of the combined company.

We are now keenly focused on successfully welcoming more than 2000, new colleagues to the company and capitalizing on both the commercial and scientific opportunities of the combined company.

Integration transformation office, which was established 18 months ago has been hard at work ensuring synergies are realized both today and in the coming years.

Speaker 1: which was established 18 months ago, has been hard at work and shorting synergies are realized both today and in the coming years. I was very excited.

I was very excited for example.

Speaker 1: All the team was rendered to the planning and execution of a company-wide innovation summit we held in mid-Namembers at Biologin's San Diego camp.

All of the few months that record to the planning and execution of a company like innovation Summit, we held in mid November at <unk>, San Diego campus scientists executives and other business leaders from across the company. All came together for several days to lay the ground work for the science.

Speaker 1: scientists, executives, and other business leaders from across the country.

Speaker 1: all came together for several days to lay the groundwork for the scientific collaborations which we look to realize across our business.

Collaborations, which we look to realize across our businesses.

Speaker 1: as well as build upon the commercial opportunities that can be successfully achieved by working together.

As well as build upon the commercial opportunities that can be successfully achieved by working together.

So the external world has recognized a few prominent transformational events.

We are also making great progress on our strategic imperatives.

2022 is shaping up to be another strong year of internal innovation for the company.

Speaker 1: 2022 is shaping up to be another strong year of internal innovation for the country.

Speaker 1: With a number of exciting new product launches planned for over the coming months.

With a number of exciting new product launches planned for over the coming months.

We expect to meaningfully impact our business moving ahead.

Speaker 1: One example is Euroview's Accentus platform, which is a high-throughput, random-access, chemiluminescence platform targeted towards high-volume laboratories.

One example is you don't use except this platform <unk>.

Is a high throughput random-access chemiluminescence platform targets.

Targeted towards high volume in the Barclays.

Which will be supported by a strong menu of assays as we move into 2023.

With this analytical we're continuing our commitment to drive innovation as we refresh of its portfolio with the recent launches such as the Nexium 5000, ICP Ms and the spectrum FTIR.

Both of which have been very well received.

This year the focus is on chromatography.

Speaker 1: In addition to having just refreshed our LC and CDS, we expect to launch a new.

In addition to having just refreshed our LC and Cvs.

We expect to launch a new GC around midyear.

Speaker 1: It will be our first update to the platform in over a decade.

It would be our first update to the platform in over a decade.

Speaker 1: and I'm excited to see its increased performance, enhanced user experience, and robustness provide meaningful and unique advantages to our customers.

And I am excited to see its increased performance enhanced user experience and robustness provide meaningful and unique advantages to our customers.

Finally.

Although not necessarily a new introduction.

Speaker 1: I'm enthusiastic around the potential for our Vanadis platform.

<unk> has the potential for our vantage platform.

Speaker 1: Particularly in the US market, as we expect system placements to continue to ramp up in 2022.

Particularly in the U S market as we expect system placements to continue to ramp up in 2022.

Speaker 1: and commercial test volumes on the system to more than double.

In commercial test, while use of the system to more than double.

Speaker 1: All in all, we've been very active over the past 12 months, adding new pieces to the company.

All in all we've been very active over the past 12 months, adding new pieces to the company but.

Speaker 1: But I think it's just as important to highlight our internal innovation.

But I think it's just as important to highlight that in total innovations.

Speaker 1: which drove a 15% increase in the number of new product interactions in 2021.

Each drove a 15% increase in the number of new product introductions in 2021.

Speaker 1: and should help drive an organic growth in the use to come.

And should help drive organic growth in the years to come.

Just as importantly.

Speaker 1: We believe a true differentiator for Parthenelma is that we are now bringing significant value by offering of holistic state affiliations across our portfolio.

We believe a true differentiator for bucket.

Is that we are now bringing significant value by offering a holistic suite of solutions across our portfolio.

Speaker 1: to help customers solve their most critical challenges.

To help customers solve their most critical challenges.

Speaker 1: We are empowering entire end to end workflows.

We are in poverty entire end to end workflows.

Speaker 1: Whether my helping diagnostic customers reach a wider spectrum of patients in the identification of diseases.

Helping diagnostic customers reach a wider spectrum of patients in the identification of diseases.

Speaker 1: Improving the pharma discovery workflow or offering a differentiated solution for cell and gene therapy discovery and development.

Improving the pharma discovery workflow.

Or offering a differentiated solution for cell and gene therapy discovery and development.

Speaker 1: As the company has grown, I'm proud we continue to have a keen focus on our people and their development.

The company has grown.

We continue to have a keen focus on our people and their development right.

Speaker 1: while building a company culture that values one another's diverse backgrounds and perspectives.

While building a company culture that values and other diverse.

Diverse backgrounds and perspectives.

Speaker 1: including the wealth of expertise and talent from all our new Puccinella colleagues.

Including the wealth of expertise and talent from all our new pocket of our colleagues.

Speaker 1: from implementing new training and leadership program.

From implementing new training and leadership programs.

Speaker 1: To getting a pulse on our employee satisfaction through a recent employee engagement survey.

So getting a pulse on our employee satisfaction through our recent employee engagement survey.

Speaker 1: We are sharing in our recent collective success to an incremental company-wide end-of-the-year bonus for the second consecutive year.

Two sharing in a recent collectives obsessed with incremental company like end of the year closes for the second consecutive year.

Speaker 1: I'm happy to see a strong focus on our employees and the great performance they have delivered over the last seven years.

I am happy to see a strong focus on our employees and the great performance. They have delivered over the last several years.

So while I know this has been a challenging last two years.

Speaker 1: I just want to say thank you to all our employees around the globe for helping turn Pakistan into such a great place to work while executing at an extremely high level.

I just want to say, thank you to all our employees around the globe.

Our healthy return bucket.

It is such a great place to work, while executing at an extremely high level.

Speaker 1: In addition to our people, the customer experience.

In addition to our people the customer experience.

Elevation and operational excellence comprise this year's strategic priorities that we have laid out for the company in terms of the customer experience. We are all committed to serving customers well.

Speaker 1: And operational excellence comprise this year's strategic priorities that we have laid out for the company. In terms of the customer...

Speaker 1: We are all committed to serving customers when, where, and how they need us.

And how they need us.

Speaker 1: We couldn't have witnessed a better example of this during the pandemic.

We have witnessed a better example of this during the pandemic as.

Speaker 1: as customers requirements fundamentally shifted and required new ways of working, innovating and connecting, not only for our COVID related customers, but also for those across all our market segments.

As customers requirements fundamentally shifted and require new ways of working innovating and connecting not only for our COVID-19 related customers, but also for those across all our market segments.

When it comes to innovation.

Speaker 1: We are viewing it from a different lens than perhaps just a few years ago.

Moving it from a different levels.

Just a few years ago.

Speaker 1: So beauty of having these additions to the parking lot family.

The beauty of having these additions to the popular family.

Speaker 1: means that we can create new living innovation.

Means that we can create new leading innovations.

Speaker 1: We are in the best position yet to bring together cutting-edge science and the emerging needs of our customers. And we do believe that any employee, no matter their role, can and should initiate an advanced customer given ideas. Last.

We ended the best positioned yet to bring together cutting edge science and emerging needs of our customers.

And we do believe that any employee no matter their role can and should initiate an advanced customer driven ideas.

Last but not least let.

Speaker 1: Many of you are familiar with the goals we have been driving around operational excellence which encompasses delivering best in class quality continuously.

Many of you are familiar with the goals, we have been driving operational excellence, which has kept fastest delivering best in class product quality.

Continuously improving processes.

Speaker 1: as well as ensuring the seamless and effective execution on integration that can take a look here but you find that it's still broadcasting on zero.

As well as ensuring seamless and effective execution on our integration priorities.

Speaker 1: While Jamie will cover our financials in more detail, as you saw a few weeks ago in our pre-delies, our fourth quarter results were again strong and Obama initial expectations. Despite facing several hundred basis points of supply chain and other headwinds that came in above and beyond what we had anticipated, as a start of the quarter.

While Jamie will cover our financials in more detail as you saw a few weeks ago in our pre release a form.

Third quarter results were again strong and Obama initial expectations. Despite facing several 100 basis points of supply chain and other headwinds that came in above and beyond what we had anticipated at the start of the quarter.

Speaker 1: I'm very proud to see how our team is reacting to these challenges.

I'm very proud to see how our team has reacted to these challenges.

Speaker 1: and working to overcome them while also handling the increasingly strong incoming demand from our customers.

Working to overcome them.

Also handling the increasingly strong incoming demand from our customers.

Speaker 1: which has led to record high backlash entering 2022. Of significant

Which has led to record high backlog entering 2022.

Up significantly from a year ago.

Speaker 1: This strong performance in 4Q led to a full 2021 non-COVID organic growth coming in at 16% which was above our previous guideline.

This strong performance in <unk> led to a full 2021 non covered organic growth coming in at 16%.

Which was above our previous guidance and more than double the initial 5% to 7% range, we projected at the beginning of the year.

Speaker 1: and more than double the initial 5 to 7% range we projected at the beginning of the year.

And as I previously mentioned this is all in with US entering 2022 on a solid footing with very strong backlogs.

Speaker 1: This is all with us entering 2022 on a solid footing with very strong backlog.

Speaker 1: So I'm also pleased to share our initial outlook for 2022.

So I'm also pleased to share our initial outlook for 2022.

Speaker 1: which despite some heavens likely continuing at least for the time being.

Rich despite some headwinds likely continuing at least for the time being.

Speaker 1: is a testament to the company's transformation over the past several years. Furthermore, I believe our performance and expectations moving ahead are proof that we are now able to overcome various cyclical pressure.

Is a testament to the company's transformation over the past several years.

I believe our performance and expectations moving ahead.

A proof that we are now able to overcome various cyclical pressures and.

Speaker 1: and still deliver on our commitments in a way I'm not sure the company was able to consistently do in the past.

And still deliver on our commitments and the way I am.

Not sure the company was able to consistently do in the past.

Speaker 1: Jamie will give you more details. But for 2022, we are walking towards delivering upon our goals for 2023 that we highlighted at the recent JD modern conference.

Jamie will give you more details but for 2022.

We are working towards delivering upon our goals for 2000.

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As we highlighted at the recent Jpmorgan conference.

Speaker 1: As part of this progression to high-fimilies is for organic growth.

As part of this progression to high single digit organic growth.

Speaker 1: We are raising up previous assumptions for 2022, non-COVID organic growth by 100 bips, to allow the 60-8% range this year.

We are raising our previous assumptions for 2022 non covered organic growth by 100 bps.

Good now means a 6% to 8% range this year.

Speaker 1: This increased outlook is driven by the very strong demand environment we currently see and the positive contribution from our recent high-world acquisition.

This increased outlook is driven by the very strong demand environment with QVC and.

And the positive contribution from our recent high growth acquisitions.

Speaker 1: Why we do expect COVID testing demand to eventually fall off significantly?

While we do expect Covid testing demand to eventually fall off significantly.

Speaker 1: For the time being, it's clear that testing is likely to remain above our post-cose baseline assumption.

For the time being it's clear that testing is likely to remain above our post COVID-19 baseline assumptions at least through the first quarter.

Speaker 1: And we are assuming at least $400 million of COVID revenues.

We are assuming at least $400 million of corporate revenues this year.

Speaker 1: This leads to our initial outlook for adjusted EPS for this year to be in the range of $6.80 to $7.

This leads to our initial outlook for adjusted EPS for this year to be in the range of $6 80 to $7.

Speaker 1: So as you can hopefully see, we are a fundamentally changed company with a great trajectory going forward while being able to consistently execute and deliver on our commitment.

So as you can hopefully see we are a fundamentally changed company with a great trajectory going forward why are you being able to consistently execute and deliver on our commitments.

Speaker 1: I'm inspired to see not only how possible, but continues to enable our customers to advance their science like never before.

I'm inspired to see not only how bucket continues to enable our customers to advance their science like never before.

Speaker 1: but also the power of our diverse and talented employees.

But also the power of our diverse and talented employees constantly pushing the boundaries of what's possible.

Speaker 1: Constantly pushing the boundaries of what's possible.

Speaker 1: With that, I'd like to turn it over to Jamie to provide more color on our fourth quarter performance and our 2022 Outlook.

With that I'd like to turn it over to Jamie to provide more color on our fourth quarter performance and our 2022 outlook.

Jamie.

Thanks, a lot and good evening, everyone before turning to the financial results I want to remind everyone that our fourth quarter earnings call presentation has been posted on the investors section of our website under financial information.

Speaker 2: Before turning to the financial results, I want to remind everyone that our fourth quarter earnings call presentation has been posted on the Investor section of our website under financial information.

Speaker 2: After a lot of mention, we had another successful quarter to the close out of 2021, which again came in above our expectations on both the top and bottom line, despite taking some headwinds that were slightly greater than we had anticipated going into the quarter.

As Todd mentioned, we had another successful quarter to the closeout of 2021, which again came in above our expectations on both the top and bottom line. Despite facing some headwinds that were slightly greater than we had anticipated going into the quarter.

Speaker 2: I think this performance in the face of some cyclical adversity is a proof point of the transformation that has taken place at the company over the last two to three years.

I think this performance in the face of some cyclical adversity is a proof point of the transformation that has taken place at the company over the last two to three years.

Speaker 2: not only from a portfolio of compositions standpoint, but also from an operational agility

Not only from a portfolio composition standpoint, but also from an operational agility and teamwork perspective.

Speaker 2: While supply chain and lockdown pressures are likely to be temporary in

While supply chain and lockdown pressures are likely to be temporary in nature, new challenges will inevitably arise, but our team has demonstrated the ability to execute and flourish in any environment.

Speaker 2: New challenges will inevitably arise, but our team has demonstrated the ability to execute and flourish in any environment. I am grateful and proud of their efforts.

I'm grateful and proud of their efforts.

Speaker 2: Moving to the top line in the fourth quarter, it was great to see both our COVID and non-COVID revenues again exceed our expectation.

Moving to the top line in the fourth quarter. It was great to see both a COVID-19 and non COVID-19 revenues again exceed our expectations.

Speaker 2: as both our discovering analytical solutions and our diagnostic segments came in better than we had expected on a non-COVID base.

Both our discovery and analytical solutions and our diagnostics segments came in better than we had expected on a non COVID-19 basis.

Speaker 2: I'm also pleased to see our recent additions performing very well and contribute over $150 million of incremental revenue in the quarter with more than half coming from Biolets.

I'm also pleased to see our recent addition, performing very well and contribute over $150 million of incremental revenue in the quarter with more than half coming from biologics.

Speaker 2: Overall, our adjusted revenue came in at $1.36 billion, which was up 1% year over year, despite our COVID revenues declining significantly and compared to the fourth quarter of 2020.

Overall, our adjusted revenue came in at 136 billion.

Which was up 1% year over year, despite our COVID-19 revenues declining significantly compared to the fourth quarter of 2020.

Speaker 2: Foreign exchange was a 1% headwinds revenue, slightly worse than what we had assumed at the start of the quarter, while recent acquisitions added 11% to our total revenues, which was in line with our expectations.

Foreign exchange was a 1% headwind to revenue slightly worse than what we had assumed at the start of the quarter. While recent acquisitions added 11% to our total revenues, which was in line with our expectations.

Speaker 2: When combined with 11% non-COVID organic growth, and $336 million of COVID-related revenues, both of which I note are up slightly from our pre-announcement from a few weeks ago. Our total organic revenues only declined 9% year over year, despite COVID revenues being down over $200 million compared to the fourth quarter of 2020.

When combined with 11% of non covered organic growth.

And $336 million of Covid related revenues, both of which I note are up slightly from our pre announcement from a few weeks ago. Our total organic revenues only declined 9% year over year, Despite COVID-19 revenues being down over $200 million compared to the fourth quarter of 2020.

Speaker 2: This 9% total organic decline came in slightly favorable to the 12% decline we have approximated at the time of our pre-annout.

This 9% total organic decline came in slightly favorable to the 12% decline we had approximated at the time of our pre announcement.

Speaker 2: I'd also point out that the 11% non-COVID organic growth re-achieves in the quarter was despite an estimated three to four percent headwind from supply chain and lockdown pressures that were above and beyond what we had assumed.

I would also point out that the 11% non COVID-19 organic growth we achieved in the quarter was despite an estimated 3% to 4% headwind from supply chain and markdown pressures that were above and beyond what we had assumed at the start of the quarter.

Speaker 2: Also, the Q4 strength was certainly not because of any pull forward.

Also the Q4 strength was certainly not because of any pull forwards.

Speaker 2: As we ended the year with our record non-COVID backlog, that was up significantly compared to a year ago.

As we ended the year with a record non COVID-19 backlog that was up significantly compared to a year ago.

Speaker 2: So we are in a great position heading into 2022, and we expect to be able to work through some of this backlog in the coming months, which I'll touch on more later.

So we are in a great position heading into 2022, and we expect to be able to work through some of this backlog in the coming months, which I'll touch on more later.

Speaker 2: As to the $336 million of revenue we generated in the fourth quarter from our COVID-related products and services, the contribution from our COVID-related labs was fairly consistent to the third quarter, while our product-related COVID revenue was up mid-team sequentially, in line with estimated testing volumes to approximately $200 million.

After the $336 million of revenue, we generated in the fourth quarter from our Covid related products and services. The contribution from our Covid related labs was fairly consistent to the third quarter, while our product related Covid revenue was up mid teens sequentially in line with estimated testing volumes to approximately $200 million.

Speaker 2: As highlighted in our pre-announcement, we saw strong COVID PCR tests and extraction kits in the hands throughout the fourth quarter. Especially in the month of December , has all the crimes spread across the globe.

As highlighted in our pre announcement, we saw strong Covid PCR test and extraction kit demand throughout the fourth quarter.

Especially in the month of December has omicron spread across the globe.

Speaker 2: For the four year, this brings our total COVID-related revenues to almost $1.6 billion. With the composition evenly split between our labs and product-related revenues.

For the full year. This brings our total COVID-19 related revenues to almost $1 6 billion.

With the composition evenly split between our labs and product related revenues.

Speaker 2: As it relates to our business segments, Diagnostics generated $710 million of adjusted revenue in Q4, which represented 52% of total revenue and was down 17% year-over-year.

As it relates to our business segments diagnostics generated $710 million of adjusted revenue in Q4, which represented 52% of total revenue and was down 17% year over year.

Speaker 2: Organically, the business declined 20% due to the lower COVID revenues.

Organically the business declined 20% due to the lower COVID-19 revenues year over year.

Speaker 2: On a non-COVID basis, our Cygnostics Revenue Group 14% grew over year, with all three franchises growing double digits, led again by a flight.

On a non COVID-19 basis, our diagnostics revenue grew 14% year over year with all three franchises growing double digits led again by applied genomics.

Speaker 2: Geographically, the strength in our diagnostics business was evenly spread across the globe. With each of our major geographic reasons.

Geographically the strength in our diagnostics business was evenly spread across the globe.

With each of our major geographic regions growing double digits.

Speaker 2: For the full year 2021, our diagnostic segment total revenues grew 42% and was up 35% on an organic basis as our COVID revenues were nearly 50% from a year ago.

For the full year 2021, our diagnostics segment total revenues grew 42% and was up 35% on an organic basis as our Covid revenues were up nearly 50% from a year ago.

As it relates to our applied genomics business, which falls within our diagnostics segment.

Speaker 2: in our diagnostic segment. Total revenue declined significantly year over year due to the drop in COVID revenues, but grew more than 30% on a

Total revenue declined significantly year over year due to the drop in Covid revenues, but grew more than 30% on a non COVID-19 basis.

Speaker 2: Given this consistently strong non-COVID growth throughout 2021

Given this consistently strong non COVID-19 growth throughout 2021.

Speaker 2: Our applied genomics business was up more than 50% last year on a non-COVID-based.

Our applied genomics business was up more than 50% last year on a non COVID-19 basis.

Speaker 2: Of note, we are seeing strong demand for our Janus Liquid Handlers amongst biotech customers and clinical NGS providers.

Of note, we are seeing strong demand for our Janus liquid handlers amongst biotech customers and clinical mgs providers.

Speaker 2: While we expect our applied genomics business to remain strong in 2022, we anticipated top-line growth rates to normalize after the outsized growth this past.

While we expect our applied genomics business to remain strong in 2022, we anticipated top line growth rates to normalize after the outsized growth this past year.

Speaker 2: In our immunodiagnostic franchise, total organic revenue was down slightly more than 20% year over year in the quarter due to the reduction in overall COVID revenues compared to a year ago.

Immuno diagnostics franchise total organic revenue was down slightly more than 20% year over year in the quarter due to the reduction in overall COVID-19 revenues compared to a year ago.

Speaker 2: However, on a non-COVID basis, organic growth was up low double digits globally, despite facing a larger-than-expected impact from COVID-related lockdowns, especially in China.

However, on a non COVID-19 basis organic growth was up low double digits globally.

Right speaking of larger than expected impact from Covid related lockdowns, especially in China.

Speaker 2: Your omin also continued to grow double digits in Q4 and finished the year with greater than 20% organic.

<unk> also continued to grow double digits in Q4 and finished the year with greater than 20% organic growth both on a non COVID-19 basis, its integration of IHS, which we acquired back in mid 2021 is off to a great start with joint commercial activities already underway.

Speaker 2: both on a non-COVID basis. Its integration of IDS, which we acquired back in mid-2021, is off to a great start, with joint commercial activities already underway.

Speaker 2: Oxford Sosteron Growth in 2021 and performed in line with our expectations for the year. At some headwinds from lockdowns in certain regions were offset by increasing traction of its COVID-related T cell assays, which are being used in research to better understand post-black scene and post-infection potential immunity by both black scene manufacturers and government agencies.

<unk> saw strong growth in 2021 and performed in line with our expectations for the year as some headwinds from Lockdowns in certain regions were offset by increasing traction of its COVID-19 related key cell assays.

Which are being used in research to better understand post vaccine and post infection potential immunity by both vaccine manufacturers and government agencies.

Speaker 2: As it relates to our reproductive health franchise, while we have continued to face significant pressures from lower overall birth rates in some regions, such as China, over the last few months, we have started to see in some development markets

As it relates to our reproductive health franchise, while we have continued to face significant pressures from lower overall birth rates in some regions such as China.

Over the last few months, we have started to see in some developed markets, including the U S and parts of northern Europe birth rates begin to flatten out or even increase compared to last year.

Speaker 2: including the US and parts of Northern Europe . Birth rates begin to flatten out or even increase compared to last year.

Speaker 2: While it is much too early to determine if this is a durable trend, it is encouraging to see some stabilization after consecutive years of mid-single-digit declines in birth rates.

While it is much too early to determine if this is a durable trend. It is encouraging to see some stabilization after consecutive years of mid single digit declines in birth rates.

Speaker 2: Our reproductive health business performed well with low double digits non-COVID organic growth, both for the quarter in the full year given by continued market penetration, menu expansion, strong growth in our lives.

Our reproductive health business performed well with low double digit non COVID-19 organic growth both for the quarter and the full year driven by continued market penetration menu expansion strong growth in our lab business and an increasing contribution from our noninvasive prenatal testing offering candidates.

Speaker 2: and an increasing contribution from our non-invasive green needle testing offering fanatists.

Speaker 2: Turning to the discovery and analytical solution segment, the business generated $655 million in revenue in the quarter, which represented 48% of total revenue and was up 30% year-over-year.

Turning to discovery <unk> analytical solutions segment, the business generated $655 million in revenue in the quarter, which represented 48% of total revenue and was up 30% year over year.

Speaker 2: Organically, the business grew 9% led by strong growth in our life science business amongst our pharma biotech customers which grew in the low double digits.

Organically the business grew 9% led by strong growth in our life science business amongst our pharma biotech customers, which grew in the low double digits.

Speaker 2: Despite this strong life science growth in Q4, we are entering the new year with a backlog in the business that has more than doubled out of a year ago and more than tripled what it was heading into the new year.

Despite the strong life science growth in Q4, we are entering the new year with the backlog in the business that is more than double that of a year ago.

And more than triple what it was heading into 2020.

Speaker 2: So it really points to the strong demand environment for the business. But probably even more so the market share we believe we are taking.

So it really points to the strong demand environment for the business, but probably even more so the market share. We believe we are taking.

Speaker 2: I think this is a strong proof point that our complete pharma discovery workflow solutions for these customers are really...

I think this is a strong proof point that our complete pharma discovery workflow solutions for these customers are really resonating from content development with biologic target identification to our high content screening offerings.

Speaker 2: from content development with bioligen to target identification, to our high content screening offerings, through to our preclinical in vivo imaging offerings, which are allowing us to provide our customers a more complete research workflow.

Due to our preclinical in vivo imaging offerings, which are allowing us to provide our customers a more complete research workflow.

Speaker 2: These offerings were obviously bolstered over the last year via the editions of Paryzen, Syrian, Nexolome, and of course Biola.

These offerings were obviously bolstered over the last year the additions of Horizon Syrian next alone and of course biologics.

Speaker 2: More specifically, next on the solve record quarterly revenue in Q4, while bioligen continue to grow strongly in the double digits, contributing $80 million in revenue in the quarter.

More specifically and excellence of record quarterly revenue in Q4, while <unk> continued to grow strongly in the double digits contributing $80 million in revenue in the quarter.

Speaker 2: Through this transformation, we've taken a set of industry-leading small molecule preclinical a lot.

Through this transformation, we've taken a set of industry, leading small molecule preclinical offerings and have now transform them to be well positioned to provide strong solutions to our customers working in biologic environments.

Speaker 2: and have now transformed them to be well positioned to provide strong solutions to our customers working in biologic environments.

Outside of life Sciences, we saw a strong finish to the year and our spectroscopy instrumentation business, which also grew into those double digits year over year.

Speaker 2: We saw a strong finish to the year in our spectroscopy instrumentation business, which also grew in the low double digits year over year.

Growth was led by sales into industrial accounts.

Speaker 2: which were up nearly 20% year-over-year, led by our ICP and IRI.

Which were up nearly 20% year over year led by our ICP and IR offerings, which we are seeing strong demand from a number of areas, including semiconductors batteries testing for emerging contaminants in the environment.

Speaker 2: which we are seeing strong demands from a number of areas, including semiconductors, batteries, testing for emerging contaminants and the environment.

Speaker 2: Looking at the company overall from a geographic standpoint in the quarter, we saw double-digit non-COVID growth in the Americas and APAC, while Europe grew in the high single-digit.

Looking at the company overall from a geographic standpoint in the quarter, we saw double digit non COVID-19 growth in the Americas and APAC, while Europe grew in the high single digits.

Speaker 2: China grew in the high single digits, despite being infected by both lockdowns within diagnostics, and supply chain pressures within that.

China grew in the high single digits, despite being impacted by both lockdowns within diagnostics and supply chain pressures within the deaths.

Speaker 2: Operationally, we performed well, despite the aforementioned macro variables. We were able to generate adjusted operating margins of 34%, which, while up significantly from pre-coded levels, were down from the Euroco levels due to the unfavorable next impact of lower COVID revenues versus 2020.

Operationally, we performed well despite the aforementioned macro variables, we were able to generate adjusted operating margins of 34%, which while up significantly from pre COVID-19 levels were down from a year ago levels due to the unfavorable mix impact of lower COVID-19 revenues versus 2020.

Speaker 2: We continue to invest strongly in the business and the team did a good job of managing through inflationary pressures, which we have seen continue into the new year.

We continue to invest strongly in the business and the team did a good job of managing through inflationary pressures, which we have seen continue into the new year.

Speaker 2: In an effort to offset these pressures, we began to implement significant pricing actions in the second half of last year.

In an effort to offset these pressures we began to implement significant pricing actions in the second half of last year.

Speaker 2: which we expect to translate into a net pricing impact in 2022, greater than what we have traditionally experienced. Moving to below the line.

Which we expect to translate into a net pricing impact in 2022 greater than what we have traditionally experienced.

Moving to below the line items, our adjusted net interest expense in the quarter was $26 million and our adjusted tax rate was 25%.

Speaker 2: quarter was $26 million, and our adjusted tax rate was $25.

Speaker 2: It's a better than expected top line and strong margin performance by the fourth quarter of Justin Erring's per share of $2.56, which was solidly ahead of our $2.5 guidance.

The better than expected top line and strong margin performance led to fourth quarter adjusted earnings per share of $2 56.

Which was solidly ahead of our $2 <unk> guidance.

Speaker 2: For the full year, we generated adjusted earnings per share of $11.36, which was up 37% year-over-year.

For the full year, we generated adjusted earnings per share of $11 36.

Which was up 37% year over year.

Speaker 2: Free cash flow was again very strong in the quarter, coming in at $303 million, which translated into 94% conversion of our adjusted net income.

Free cash flow was again very strong in the quarter coming in at $303 million, which translated into 94% conversion of our adjusted net income.

Speaker 2: For the full year, adjusted free cash flow was nearly $1.4 billion with over 100% conversion of our adjusted netting.

For the full year adjusted free cash flow was nearly $1 4 billion with.

With over 100% conversion of our adjusted net income.

Speaker 2: So I'm really proud of the performance the team has been able to accomplish here as we've done a much better job with our collections in particular and have vastly improved both the absolute performance and the consistency of our free cash flow generation over the last two to three years.

So I'm really proud of the performance of the team has been able to accomplish here as we've done a much better job with our collections in particular in a vastly improved both the absolute performance and the consistency of our free cash flow generation over the last two to three years.

Speaker 2: The strong task allowed us to begin our deleverging process in the fourth quarter as we were able to reduce our net depth by over $250 million.

The strong cash flow allowed us to begin our deleveraging process in the fourth quarter as we were able to reduce our net debt by over $250 million.

Speaker 2: as compared to the end of the third quarter. This leaves us with a current leverage ratio of approximately 2.2 times net debt to EBITDA, down slightly from last quarter.

As compared to the end of the third quarter. This leaves us with our current leverage ratio of approximately two two times net debt to EBITDA down slightly from last quarter.

Speaker 2: While our leverage improves sequentially and remains below our desired target of three times, we do expect our leverage to increase over the coming quarters, even as we continue to pay down additional debt, as we expect our absolute EBITDA performance to come down as COVID-19 tailwinds subside.

While our leverage improved sequentially, but remained below our desired target of three times, we do expect our leverage to increase over the coming quarters.

Even as we continue to pay down additional debt as we expect our absolute EBITDA performance to come down as Covid tailwind subside.

Speaker 2: So now moving on to guidance. As you saw a few weeks ago with the JP Morgan Conference, I'm happy to reiterate that we are already able

So now moving on to guidance as you saw few weeks ago at the Jpmorgan Conference I'm happy to reiterate that we are.

Already able to increase our medium term 2023 outlook for total revenue organic growth margins and adjusted earnings per share.

Speaker 2: The highlight is my opinion is that we now expect our core growth to be in the highest single digits in 2023 MBR.

The highlight in my opinion is that we now expect our core growth to be in the high single digits in 2023 and beyond.

Speaker 2: As it relates to this year, we are providing initial 2022 guidance for non-COVID organic growth to be in a range of 6 to 8 percent.

As it relates to this year, we are providing initial 2022 guidance for non COVID-19 organic growth to be in the range of 6% to 8%.

Speaker 2: which includes the impact of our recent acquisitions rolling in throughout the year with biodegrading only contributing to our organic growth starting in the fourth quarter.

Which includes the impact from our recent acquisitions rolling in throughout the year with bio legend, only contributing to our organic growth starting in the fourth quarter.

Speaker 2: with an estimated contribution for the MNA of approximately 7%, and assumed that 1% had been from foreign exchange. And at least $400 million.

With an estimated contribution from M&A of approximately 7%.

And assumed 1% headwind from foreign exchange and at least $400 million of Covid related revenue. This brings our expected total revenue in 2022 to be in the range of $4 four two to $4 $501 billion.

Speaker 2: This brings our expected total revenue in 2022 to be in a range of 4.42 to 4.50 billion dollars.

Speaker 2: I note these assumptions to not account for any incremental lockdowns and or any COVID-related disruptions.

I would note these assumptions do not account for any incremental lockdowns and or any COVID-19 related disruptions.

As it pertains to our Covid related revenues within the at least 400 million dollar contribution we are projecting for this year. We are cognizant that there is a wide range of potential scenarios.

Speaker 2: Within the at least $400 million contribution we are projecting for this year, we are cognizant there is a wide range of potential scenarios.

Speaker 2: But we are assuming approximately $240 million occurs in the first quarter.

But we are assuming approximately $240 million occurs in the first quarter.

Speaker 2: This is announced from the $336,000,000 we generated in the fourth quarter of 2021.

This is down from the $336 million, we generated in the fourth quarter of 2021.

Speaker 2: Our guidance assumes there are no additional variants that cause significant spikes in testing. And so that by the second half of the year, testing subsides, and we reach our terminal level of COVID-related revenues of approximately $25 million per quarter.

Our guidance assumes there are no additional variance that caused significant spikes in testing and so that by the second half of the year testing subsides and we reach our terminal level of Covid related revenues of approximately $25 million per quarter.

Speaker 2: Depending upon the level of PCR testing demand over the coming months and the durability of our various COVID related land contracts, it is possible our expectations could prove conservative.

Depending upon the level of PCR testing demand over the coming months and the durability of our various COVID-19 related lab contracts. It is possible our expectations could prove conservative.

Speaker 2: But we believe the at least $400 million is a comfortable level at this point.

We believe the at least $400 million is a comfortable level at this point how.

Speaker 2: However, as we and most others have seen during this pandemic, projecting future testing demand out more than a month or two is quite difficult and we prefer to plan with a more cautious approach.

However, as we and most others have seen during this pandemic.

Projecting future testing demand out more than a month or two is quite difficult and we prefer to plan with a more cautious approach.

Speaker 2: In terms of earnings, we are expecting to be able to deliver adjusted earnings per share this year of between $6.80 to $7, which equates to nearly 20% CAGR since 2009.

In terms of earnings we are expecting to be able to deliver adjusted earnings per share. This year of between $6 80 to $7, which equates to nearly 20% CAGR since 2019.

Speaker 2: This attuned to approximately $105 million of net interest in other expenses.

This assumes approximately $105 million of net interest and other expenses.

Speaker 2: an adjusted tax rate of 20%, and our average diluted share count being in the range of 126 to 127 million shares, as we continue to expect offset compensation-related dilution.

And adjusted tax rate of 20% and our average diluted share count being in the range of 126 to 127 million shares as we continue to expect to offset compensation related dilution.

For the first quarter, we are projecting reported total revenue to be in a range of $1 107 to $1, one 9 billion.

Speaker 2: $1.17 to $1.19 billion.

Speaker 2: which consists of non-polluted organic growth of seven to nine.

Which consists of non COVID-19 organic growth of 7% to 9% and M&A contribution of 11% or 2% headwind from foreign exchange and the $240 million of Covid related revenue, which are down $310 million from the year ago period.

Speaker 2: an M&A contribution of 11%, a 2% headwind from foreign exchange, and the $240 million of COVID-related revenue, which are down $310 million from the year-ago period.

Speaker 2: Within the 7 to 9% non-COVID organic growth assumption is a modest amount of benefit from working through a portion of the current record high backlog.

A 7% to 9% non COVID-19 organic growth assumption is a modest amount of benefit from working through a portion of the current record high backlogs.

Speaker 2: That said, moving forward we hope to run the business with a higher absolute level of backlog than we have in the past, which I believe will further improve our ability to consistently execute towards our goals.

That said moving forward, we hope to run the business with a higher absolute level of backlog than we have in the past, which I believe will further improve our ability to consistently execute towards our goals.

Speaker 2: In terms of adjusted earnings for share for the first quarter, we are forecasting a range of $2.5 to $2.10, which assumes $27 million of adjusted net interest in others.

In terms of adjusted earnings per share for the first quarter, we are forecasting a range of $2 <unk> to $2 10.

Which assumes $27 million of adjusted net interest and other expenses.

Speaker 2: and an adjusted 21% tax rate and a diluted share count of $126 to $127 million.

On an adjusted 21% tax rate and a diluted share count of $126 million to $127 million.

Speaker 2: And while we are not providing quarterly guidance at this time for the remainder of the year, I would point out that we will be facing our most difficult year ago organic comparison in Q2 this year for your modeling purposes.

And while we are not providing quarterly guidance at this time for the remainder of the year I would point out that we will be facing our most difficult year ago organic comparison in Q2 this year for your modeling purposes.

All of this guidance as detailed on the second to last page of today's presentation that is on our investor website as well.

Speaker 2: In closing, a year ago I described the year 2020 as likely being one of the most important in the history of Perkin Elmer, and that I felt we were much better positioned as an organization heading into 2021.

In closing a year ago I described the year 2020, as likely being one of the most important in the history of Perkin Elmer.

And then I felt we were much better positioned as an organization heading into 2021.

Speaker 2: After completing the addition of nine new businesses to the Perkonomor family over the last 14 years.

After completing the addition of nine new businesses to the FERC number family over the last 14 months, while also continuing to make significant progress on our internal strategic imperatives I'll repeat my comments from a year ago.

Speaker 2: while also continuing to make significant progress on our internal strategic imperatives, I will repeat my comments from a year ago. In that I think 2021 is likely going to go down as one of the most important years in the history of Perkin Elmer, and I know we are much better positioned as an organization heading into 2022.

I think 2021 is likely going to go down as one of the most important years in the history of Perkin Elmer and I know, we are much better positioned as an organization heading into 2022.

Speaker 2: And with that operator at this time, we would like to open up the call for questions.

And with that operator at this time, we would like to open up the call for questions.

Speaker 3: Certainly. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one or your telephone keypad. If for any reason you would like to remove that question, please press star followed by.

Certainly we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad.

Any reason you would like to remove a question. Please press star followed by Tim again to ask a question. Please press star one as a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question, we will pause briefly to allow questions to generate in Q.

Speaker 3: Again, to ask a question, please press star one. As a reminder, if you're using a speaker phone, please remember to pick up your handset before asking your question. We will pause your brief leave to allow questions to generate in

Speaker 3: The first question is from a line of Dan Arias with C-Full. You may proceed.

So first question is from the line of Dan Arias with Stifel. You May proceed.

Speaker 4: Guys, thanks for the questions. Jamie, maybe just to start with the guide for the year, what is the op margin outlook that's assumed under the $6.80 to $7? And then along those lines, are you able to split out what's due to mix versus other factors like?

Afternoon, guys. Thanks for the questions Jamie on maybe just to start with the guide for the year.

What is the op margin outlook, that's assumed under the $680 to seven Bucks and then along those lines are you able to split out what's due to mix versus other factors like.

Speaker 4: investments and and so job is the impact of the changing COVID testing profile on profitability as a focus. So I know testing is a moving target, but any help that you can give us there as we just sort of think about how that shifts would be helpful.

Investments and such obviously the impact of the changing Covid testing profile on profitability is a focus so I know testing is a moving target, but any help you can give us there as we just sort of think about how that shifts would be helpful.

Sure Yeah, Hi, Dan.

Speaker 5: So the operating margin assumption is in the high 20s. Let's call it 27, 28% overall. And much of it is due to mix. We obviously we've got COVID going away at relatively high margin rates.

So the operating margin assumption is in the high <unk>, So let's call. It 27, 28% overall and much of it is due to mix.

Obviously, we've got COVID-19 going away at relatively high margin rates.

Speaker 5: and then growth in the core and M&A coming in at still 40 plus percent incremental so that overall gets you to the 27-ish percent operating margin rate.

And then growth in the core and M&A coming in and still 40 plus percent Incrementals. So that overall gets you to the 27 ish percent operating margin rate.

Speaker 5: And in terms of driving for activity, I think it's everything that we've always been talking about. We've got a lot of programs going on both with our procurement teams, with new product introductions and reconfiguring. Everything that's going on with services acceleration.

And in terms of driving productivity I think it's everything that we've always been talking about we've got a lot of programs going on both with our procurement teams with new product introductions and Reconfiguring everything that's going on with services acceleration and then to your point, we did make a lot of investments over the last year. We took some of the COVID-19 products the profits too.

Speaker 5: And then to your point, you know, we did make a lot of investments over the last year. We, you know, took some of the COVID products, the profits to invest in the future and things like R&D, selling and marketing, digital and information technology and people. And so those were more normalized as we head into 2022. And so if we do a confidence, you know, 27% is achievable here.

Invest in the future in things like R&D, selling and marketing digital and information technology and people and so those will be more normalized as we head into 2022.

So if we we feel confident that two.

27% is achievable here.

Yeah, Okay. Thank you.

Speaker 4: And then maybe on the diagnostic side, specifically EuroMune, that was a mid teens grower in 2019 before COVID entered the picture. Can that business get back to those levels or something close this year on the non-COVID side, just given that you're...

And then maybe on the diagnostics side, specifically your immune that was.

Mid teens grower in 2019 before Covid enters the picture can that can that business get back to those levels.

Or something close this year on the non Covid side.

Given that you are.

Thank you Greg is in each geography with double digit growth it sounds like youre launching some new products, there and presumably conditions should continue to improve year. So just wondering how you kind of presume the trajectory that you had before COVID-19 entered the picture.

Yes, Dan.

Think assumption going into as you pointed out you don't mean has always been a double digit grower in our assumption is that it will continue to bleed.

One in 'twenty, two and beyond can be only caveat I would say in a lot of that obviously is dependent on what happens with COVID-19 .

The Lockdowns and obviously often takes a back seat but.

As we have assumed that things will start to normalize into the second half of the year that there'll be a double digit grower.

Okay. Thank you very much.

Operator, we're ready for the next question.

Bethany are you there.

It looks like we've lost the operator for one moment.

Bear with US one second thank you.

Apologies. Our next question is from Vijay Kumar of Evercore P. J.

Please go ahead.

Sure.

Hi, Thanks for taking my question and then maybe Jamie one.

I'll start with the guidance here and I had one one for mark furlong.

The guidance Simplistically, you guys had 16%.

Base growth organic growth in fiscal 'twenty one.

You're guiding to 68%.

That feels like it's coming in a little bit better than what we were expecting given the comps here I think you mentioned.

Backlog here orders coming in above maybe talk about your backlog how much visibility is that giving you to this high singles growth.

Also maybe talk with pricing I think you made some comments on pricing.

Price actions, you took and why is it prudent to assume.

No impacts of Lockdown, just given I think you mentioned two to four points so far.

<unk> in Q4.

Jay there's a lot in there so I don't think it should be a surprise that 6% to 8% I think we've been saying look the base business before our acquisitions could grow 5% to 7% and.

And we said that by 2023 would be high single digits and along the way in 2022, we'll have a lot of these acquisitions come in throughout the year and Thats. The first part of the step up in fact on a pro forma basis with our acquisitions. We are actually high single digits with this guide so the six to eight percentages biogen coming in in the fourth quarter several others coming in in the <unk>.

First through the third quarter.

Hopefully, it's not too much of a surprise and I think just generally speaking.

As we step back from it I think the end market seems strong.

I mentioned, our backlog is strong we're not expecting a lot of the backlog to flush this year pricing has an upside lever to it as well, but the difference between the five to seven in the six to eight is really oil and gas or same thing on a pro forma basis. If you go back we said desk can be mid single digits in the past and Dr.

<unk> diagnostics to be high single digits that is now moving to mid to high single in this guide and on a pro forma basis basis. It is a high single digit guide. So overall I hope, it's pretty consistent with what we've been guiding people over the next couple of years.

And just to add to that.

This is probably another proof point that we I don't know right at the high single digits growth that we said that in 2020 23 as you recall three weeks ago.

<unk> of what we said at Jpmorgan conference that will be 7% to 9% in 2003.

Our story of.

Being in the midst of the transformation is over and our transformation is completed and youre starting to see the benefits of what all the hard work that has gone on over the past two to three years.

So I think moving forward as we move into 2020 key is a high single digit company. This is the next step in that direction.

That's helpful.

Commentary.

Maybe one related to that question on the <unk> comments, great. Thank you J P. You guys said $7 of earnings from North of $7 with margins up by 26.

I think if I'm looking at your base.

<unk> margins here for fiscal 'twenty. Two I think you guys were already at 22% op margins here for the base business with BIOLASE as being incremental.

Maybe talk about your margins visibility to margin trajectory.

96% you laid out for <unk>.

Fiscal 'twenty, three and as BIOLASE is still expected to be $280 million of contribution in fiscal 'twenty. Two I thought Q4, perhaps came in a little light.

In Q4 Q4 came in as we expected DJ So biologic overall still hit $320 million of revenue for the year and was up 33% versus the prior year and we said to you.

Okay.

Consistent and strong well I think to your bigger question purely Richard that you asked I think the way to think of it is that for us.

Both Jimmy and I have pointed out 26% is just a mid point into our journey as we continue to transform the company.

Yes. This is really changed we are now better equipped to overcome cyclical or other challenges.

Surely if diagnostics and life Sciences is 80% of our business I think that's the piece that continue.

Continued to communicate to you guys that this is a company that is now going to be.

High single digit growth company, which is going to deliver a margin in the late twenties.

<unk>.

We are at a point, where essentially you know what we have forecasted for the next 24 months.

If you look at what we have pointed out for 'twenty two and we just pointed out were 23 will be for us at J P. Morgan.

Okay.

I couldnt be prouder of the story that we have sitting here to communicate on behalf of 16000 employees today.

Fantastic Congratulations gentlemen.

Thank you Lisa.

Thank you. Our next question comes from Donald <unk> of Wells Fargo. Don Please begin with your question.

Thanks for the time here just a couple first off on pricing power can you elaborate a bit more on how you feel about pricing power across the enterprise and perhaps quantify the greater pricing you expect to capture in 'twenty two.

Yeah, Hey, Dan So yes.

A big portion of our business as you know is on reagent rental so to the extent that they are coming up for renewal, we can affect those but much of our businesses.

100, 235 year contracts, otherwise, though historically pricing has been we'd call it less than a 100 basis points, maybe 50 basis points and while we don't want to guide specifically.

I would say exactly what our pricing power will be it's going to be as I mentioned in my prepared remarks substantially more this year and we've been having conversations with our customers our commercial team as I've mentioned in the past there doesn't seem to be a lot of pushback.

So we feel confident in having a lot more pricing power. This year on to the extent that we can affect it in certain contracts.

And then a follow up Jamie if there was a lot of discussion of backlog in the prepared remarks. It was unclear to me how much of the strength in backlog due to the supply chain issues and ability to fill all the orders by year end versus <unk>.

Core organic backlog growth is there any way you could elaborate on that further.

Yes, I would say, it's a small D.

Supply chain issues, Dan, we're a relatively small component of our backlog growth.

So to put that into perspective, our backlog is up 50% year over year and it's the strongest it's ever been so yes supply chain have played a small role in that supply chain pressures and push outs that is but overall the demand on all the end markets is extremely strong both instruments and consumables are up substantially so not a huge impact on backlog.

Appreciate that color. Thank you.

Thanks, Dan.

Thank you. Our next question comes from Derek Brown of Bank of America. Derek Please begin with your question.

Hi, good afternoon.

Hey, good morning, I wanted to Hey, I wanted to follow up on Dan's question. So.

Across the life Sciences industry everyone's talking about.

Jess gaining share and not.

Not everyone apparently kean gained share I mean is it just with the fact that the markets are.

Much stronger than they have before and we're sort of be women next level demand versus.

Everybody, claiming they're taking share from maybe else I mean, I'm just trying to understand the dynamics there.

Growth for most companies is doing a lot better.

Rabat, you would think that a lot of catch up spending is done so it's more of a commentary on the broader end market outlook.

That youre seeing and then that grows next point I'm just wondering like how sustainable is this I mean are we in a new market is now 46% growth where they were historically, particularly in the data segment. Thanks.

Yes.

Great question, Barry, but I think the starting point, obviously is that the end markets are strong.

I think two other factors to consider one is it depends on where which space youre, playing we've sort of.

<unk> the areas both in life Sciences, and diagnostics, where we have a plan we have.

Sort of a provider for everything for every customer and I think whether you look at it in preclinical discovery, you've done the small molecule side or the large or the biologic side, we have sort of build our forte in that market just like on the diagnostic side, we've done that.

Reproductive health autoimmune diagnostics. So I think both of those play a role and then the fact that.

Consistently being able to put solutions in front of our customers I mean, if you go back and recall, what we presented.

Two weeks ago. The examples around how we are building a total solution virtual solution alone.

Infectious diseases, with Oxford assay order around applied genomics.

I think the answer to your question really yes. The end markets are strong, but I think also the fact that we are now able to bring a portfolio of which our customers want.

Is also playing a role anything else yeah, I think that's right.

Sure.

Thanks.

The pricing gains that Youre seeing I mean, do you expect those to be sticky and in 2023.

Just wondering is there some deflation at some point, where you have to give price back.

Hard to say Derek at this point I mean I think.

Overall, the value proposition of our products is quite strong out there. So you would hope that much of this sticks and remains moving forward.

So we hadn't heard you guys talk about vantage, it's been a while but.

<unk> sort of like an installed base update.

How you are competing against somebody Ngf's players just sort of a little bit deeper in that one and sort of what can that contribute to the reproductive health business and then I'll.

Al.

Sure Derrick I mean, I think as I've mentioned, you know, we're sort of trying to stay away from providing a.

Numbers on how many units we are installing but as I've pointed out earlier.

We have a very strong pipeline, we have started shipping equipment.

Instruments, and we are doing a lot of validation across across several sites.

I think our expectation I would say that from a commercial perspective that will double our volume in 2022, but I think more importantly, it was the fact that you pointed out around some of the other players and I think there's been enough.

Information out there around depressed, but sort of validates our product segmentation that we were trying to do with the Atlanta. This when we launched it E.

E provide OBG lines and our customers with a solution that is easy to put into action and implement more importantly focus on what matters with just 13, 18, and 21 and I think you've seen hopefully enough new then.

Arctic was around that.

That helps validate that.

Assumption that we made going into with Barnabas and.

And I think it's going to be a big driver for us to be productive helping to mid single digits.

Sure.

Yes.

What's the what's the price point of bandwidth SaaS versus an ITT and I really im done.

Sequencing sticking with your base in IBD.

Absolutely great question.

If you are going to do five to $10000 per test it's $100.

Our test versus what you get from Ngls with just several hundred dollars.

Thanks.

Yes.

Thank you Mr. Brown.

Next question comes from Katherine <unk> of Baird. Please go ahead Catherine Your line is now open.

Hey, guys congrats on the quarter and thanks for the questions.

First we wanted to do Covid testing periods provided a framework for thinking about her requesting upside potential drop through to EPS, given there's such a wide range of outcomes here is there a way to frame that for you guys.

$10 million of Covid upside would yield an additional three of EPS or something like that.

Yeah, Hey, Catharine, thanks for the kind remarks I.

I would say Covid has its pretty fairly high incrementals, so without giving specifics we have been saying, it's north of the diagnostics gross margins not a lot of extra selling cost to it. So I think that should give you. Some math in terms of what an extra $100 million can be it can be $50 million to $60 million of operating profit and then tax.

It does come with a higher tax rate.

Most of the jurisdictional incomes are a little bit higher than where we play and where our mix is so.

Hopefully that gives you a little bit of color there.

Yes, Paul.

And then can you quantify of the three to four points of supply chain lockdowns headwinds how much of that right.

Lockdown related and it seems like there should still be some lockdown impact in <unk>.

First quarter. So what are your assumptions Darrin in the <unk> guide.

That's right, yes, it will remain in the first quarter here to your point, we've taken that account into account in our guidance, but I would say the lockdown impact as opposed to supply chain disruption impact is maybe a 3rd% to 40% of that overall number so call. It a point to a point and a half.

Okay, great. Thank you.

Thank you.

Thank you Michelle.

The next question comes from the line of Josh Waterman.

With Cleveland Research you May proceed.

Josh are you there.

Jonathan you're on mute.

Yes, sorry, guys I was on mute.

Just two for you.

First wondering if you could comment on recent trends within the food business.

So the last couple of quarters that business has been growing mid single digits, maybe a bit below the DAP average are you seeing backlog build in that business.

As well I know you called out life Sciences.

Backlog build in life Sciences, but wondering if youre seeing backlog build in the food business.

Sure.

Yeah. So it has been growing nicely, it's coming off a relatively easy comp in 2020, Josh So but yeah. As we've mentioned in the past we've done a lot with our food business and it's really comprised into three areas, our food safety business, which is doing extremely well, particularly in China with our imaging business.

Food quality, we had some historical issues, but I think we've started to right. The ship there and then cannabis, which as you know it was significant in the year 2019, which is why the 2020 numbers looks pretty rough.

So overall I would say there are signs of life.

Cannabis I would say food safety is doing extremely well through quality is doing well and overall for the year grew mid teens I think.

And I think as we head into 2022, we're very confident so we're going back to our historical guide of say, 6% growth in food, but I think there's plenty of reasons why there could be upside there and then in terms of backlog, yes, we had the backlog grow in our food business as well it too was impacted a little bit by supply chain. So it was both supply chain pressure plus demand increase.

Our backlog in our food business.

Got it and then can you provide some additional context on what you're seeing in China from an end market perspective, I guess what level of growth are you expecting from that region kind of within your 'twenty two guide.

Yes, So China has been extremely strong for us I think for the year at 20% or 24% growth something like that.

And that was obviously off an easier comp in the year 2020, but as we head into 2022 were thinking high single digits. So we are still factoring in some concerns around COVID-19 and particularly in our <unk> business as you might remember diagnostics makes up a large portion a larger portion of the mix in China.

So reproductive health in the birth rate pressures that we've seen in China dragged that down kind of in the high single digits versus historically, we've been seeing double digits. So in this guide we're thinking high single digits overall, Josh life Sciences has been extremely strong applied genomics has been extremely strong, but as a percentage of their overall business, it's a little bit smaller.

Yeah.

Got it I appreciate the context.

Thank you Mr Waldman.

The next question comes from the line of Jack Meehan with Nephron Research you May proceed.

Thank you and good afternoon.

I wanted to continue on the China discussion, but just more focused on a reflection on the fourth quarter. It's still early in earnings season, but haven't heard other companies really talk about disruption in the region and what do we need to you and others have to say, but I was just curious if you can elaborate a little bit more on some of the headwinds.

You saw in the quarter and what might have been unique to perkin Elmer that others haven't called out yet.

Yes, I would say two things Josh remember in our diagnostics business sorry, Jack there is two things.

In our diagnostics business here immune obviously plays a big role and when we saw omicron lockdowns affect the month of December we started to have a pretty dramatic impact.

Autoimmune, but largely in to other infectious disease analogy, which is a big portion of the business over there number one and then number two supply chain still affected our business over there. So the global applied backlog global food backlog Global life Sciences backlog.

Every region was impacted as a result of that so we saw both on the diagnostic side as well as some of the instruments on ADESA.

I think Jack more importantly, if you just look at the macro factors for China for us.

Continues to be a growth market for us that's not going to slow down if you look at.

One of the bigger challenges for us for some time as you know has been the Barclays.

I think it's going to hopefully.

Well Bob Barton.

Government is putting enough incentives and our hope is that as the party meets again in August . This summer, we are going to put more incentives into place for people to have kids.

So.

From immuno diagnostics on Azure as Jamey pointed out diagnostics is a big piece of our play there.

<unk> not going to slow down and.

And we haven't seen any impact as such.

Got it.

Great and as an unrelated follow up for you per lot.

A lot of commentary in the script about obviously you guys were active with M&A in 2021.

Curious just level of appetite for more deals in 2022 and on.

Similar vein given.

Given the discussion around women's health reproductive health <unk>.

What's your level of appetite for doing deals kind of in the specialty lab space to maybe help bolster that strategy.

Yes, I mean I think.

Three questions in there Jack in terms of our ability to do M&A in terms of the timing on that in terms of the space right. So I think.

We both.

Said pretty clearly that I think our focus right now will be on debt repayment and ensuring that we get back to the leverage that we are comfortable and as we've pointed out. So once we do that and once we get to a position where we do.

You will see more of it in the.

Spaces that we have played recently in the life Sciences segment and if there are any holes in our portfolio will continue to feather that and bolster that and on the diagnostic side on infectious diseases.

As you know we've now got a significantly large installed base of new customers.

And we need to fuel that engine. So similar to what you saw with Oxford around tuberculosis or with Ibs around endocrinology.

We'll continue to bolster our portfolio on assays on the diagnostic side.

Thank you.

Yeah.

Alright.

Thank you Mr Meehan.

The next question is from the line of Patrick Donnelly with Citi. You May proceed.

Hey, thanks for taking the questions guys.

Jamie maybe one for you on the backlog piece I know you talked about it being at a record and then going forward you're planning to run the business with a bit higher level of backlog. During the past can you just talk about maybe help frame that whether its magnitude of where we are today, we're kind of how much larger you are looking to go in the future and then again just wondering how much that will improve.

The visibility and transparency going forward.

Yes, I mean, I don't want to give too many specifics here, Patrick but I would say its material in particular to the businesses, where we sell instruments and that's now 20% to 25% of our overall revenue just to put that into perspective. So.

If were $5 billion $1 billion billion and a half is what we're talking about here in instruments provides good visibility and I think consistency and our ability to meet what we say we're going to do here. So I'd say, it's a relatively high portion of that overall segment on the consumable side thats much more flow and even though the backlog digging.

Increase like I mentioned.

That just already has some level of consistency to it so.

That's a little bit more color, but I think that level of backlog affords us the visibility to consistently execute what we say we're going to do.

No. That's helpful. And then maybe just one on <unk>. It sounds like the revenues are tracking pretty much where you guys expected can you just talk about the synergy opportunity now that we're about five months I guess since you closed the books both on the cost side and revenue side I know, obviously wasn't a cost synergy deal you guys wanted to invest.

On the R&D side, there, but maybe just talk through that and then the margin profile I think it's a little over 40% op margins, where those could go as well would be helpful.

Yeah. So like you said Patrick this is not a cost synergy play whatsoever with biologics we plan to continue to invest in the business.

And we did say, yes operating profit is in the high <unk> I think they can continue to tick up as they get more volume leverage for sure over time.

So nothing has affected our overall, 50% to 75 basis points beyond 2023, and viral agent fits into that.

I see.

Look at 2022 commercial synergies is why we're looking at and we mentioned five years out we could have $100 million of annualized.

And so I don't think it would be a perfect linear $20 million in the first year, maybe half that from a synergy perspective, but I think the teams are already working together, there's been a lot of training sessions of auto different.

Discussions around how to execute how to quote et cetera, and then on the innovation side I think that's what's more exciting I mean, Peter talked about Oxford and being able to use some of their antibodies and we're starting to look at that but we had mentioned we had our summit recently I think if you look at the innovation side wrapping not only biologic <unk>, but next on Oxford.

<unk>.

Syrian Horizon, we have some serious place to be able to make a difference in cell and gene therapy are continuing discovery business more into biologics as well as diagnostics. So I think the technology and innovation play is probably more exciting in the longer term, yes, I think just to add to that I think the benefit that that.

<unk> brings.

In.

Short term or near term.

Jamie pointed out the revenue synergies and obvious one as we expanded into geographies, where they don't play a role.

But I think mid to longer term the opportunity Goodbye legend gives us is that it gives us several shots at the goal. It's not just one shot and it's on the diagnostic side.

<unk> for the euro immune of Oxford, and it's on the life Sciences side, but it is with this viral or maximum.

The benefit that <unk> gives us is that it gives us opportunity to realize the product synergies and technology synergies.

Several of our businesses rather than any one or two.

That's helpful. Thank you guys.

Thank you Mr Donovan.

The next question comes from the line of Matt <unk> with Goldman Sachs. You May proceed.

Thank you and good afternoon, and thanks for taking my questions. I. Appreciate you squeezing me in.

Just two quick high level ones for me just one on Das we spent a lot of time over the past year couple of years, improving the business from operational efficiency standpoint, but also obviously putting in acquisitions I'm just wondering it sounds like you feel like you've set that business up very well for future growth. When it comes to profitability are there still areas like one source comes to mind.

Where do you feel like you can still get some levers on increasing margins from an operational efficiency standpoint, and could you just comment on the progress you think you've made to that point and how much more there is maybe to go forward on that.

Okay.

Yeah, Hey, Matt So I still think there is a large amount of opportunity in the das business for margin expansion. You mentioned one source. So I'd say, that's number one and we've talked a lot about everything we're doing around services and software that we invested in.

I would say life sciences as a whole also has a lot of leverage so as we grow the volume there I think you could have additional upside on the leverage line for life Sciences in particular, and then analytical or applied markets. I mean, I've mentioned a lot about how we're trying to redesign the products.

<unk> tried to sell more consumables.

So I think all three of our end markets food as well all have opportunity and I would say generally speaking, we're probably in the third or fourth inning maybe.

Use a baseball analogy here. So I still think there is plenty of runway in the das business.

I think just taking the up I mean, the natural progression of it has happened in that because as we've evolved the portfolio. If you just put life science in the Bath side. If you just put life Sciences and informatics together, that's close to 70% of the business for sure and I think that itself is a big needle mover on the operating margin for the business.

Yes.

Yes, Matt.

68% of the revenue of des <unk>.

So I think that helps for sure and Thats really whats moved as a mid single digits overall, two on a pro forma basis to ask at a high single digits overall organic growth perspective.

Got it that's very helpful color and then just lastly, I just want reproductive health you talked about mid perhaps some stabilization in the birth rates, particularly in Asia, but if that were to prove to be stubborn and not stabilize or grow can improve utilization and menu expansion fully offset that impact if it's sort of declining at sort of similar rates, we've seen and not get worse.

Yes. There are two there are two levers Stuart obviously, one that youre talking about non business geographic expansion that we would be able to put in place, but also the recent new NPI launches that we have had from our menu expansion perspective, as I said on BMD around SMA I don't makes a L. B.

As they start gaining traction and as more and more states for example in the U S and in Europe stopped adopting those that will help but I think the biggest driver for reproductive health in 2022 and beyond is still going to be a benefit.

As <unk> gains traction as it gains adoption that is a little more of that to bring the productive herd back into behind department mid single digit and totally agree two things one clarification, Matt. So we didn't say APAC birth rates have normalized in fact, China continues to be a significant drag it was in the U S. We saw some inflection points.

Perhaps when I wouldn't call it an inflection point, yet, but maybe they are signs here as well as certain parts of Europe . So that's the clarification number one we're still banking on the fact that China has been going down to <unk> earlier point at some point it should hit bottom and then the second thing is just to reemphasize, what I've said I mean, even if you look at our two year stack in reproductive health to your point, we've been able to offset.

Significant declines in birth rates on a two year stack basis, we are low single digits. So we're already doing what you said and then if you add to it Canada like broad said that gets you back into the 5% to 10% range and at birth rates normalize thats only upside to this as well.

Great. Thank you very much for the clarification appreciate it.

Thanks, Matt.

Thank you Mr. Zhang.

Our last question is from the line of Max Masucci with Cowen. Please go ahead.

Hey, Thanks for taking my questions.

So youre entering 2022 increased exposure to a wide range of Nextgen proteomics bio processing applications.

Those two areas can you call out any specific products that you expect to become.

More meaningful revenue contributors throughout the year.

Antibodies term upstream and downstream proteomics applications.

Cell culture media and other GMP grade products for bio processing.

Yes, Matt as you know, we don't play in cell culture media and the bio processing side, but as you pointed out on the antibody side for the genomics. That's one of the fastest growing markets or segments of Byron mentioned and I think thats the opportunity that we have so from a from a near term perspective.

That's what that's what we would see.

Anything else I would say.

You say I mean, I agree we don't play a lot in bio processing and silviculture development I mean, a small degree in horizon to some point and I think we see a little bit of prospects there Bob.

Okay got it and then one final one here.

Leveraging <unk> creation capabilities and our partnership with the next generation flow Cytometry company.

That has increased multiplexing capability, so understanding that the partnerships just getting started to be great to hear what your expectations are.

For that partnership in 2022, and then maybe just more broadly whether you see additional opportunities to optimize and merge your reagent offerings with other life science instrument companies similar partnerships.

Yes, <unk> I think biologic has had very good partnerships with <unk>.

Saying that makes genomics and several companies and I think thats going to continue there's no reason that's going to stop but I think the one that you're pointing out that some of this initial stages and is just beginning so it's tough to sort of give any quantification or any.

Any more certainty around that.

Honestly, it's a natural fit.

The flow cytometry instrument company and then.

The opportunity that they are trying to leverage.

Got it thank you.

Yes.

Thank you Mr Masucci.

There are no additional questions waiting at this time I would like to pass the conference back over to <unk> Singh for any closing remarks.

Thank you operator and in summary, this is a very exciting time for <unk> and <unk>.

Many corners of the company, we are moving the needle both in science and health care and we are pursuing important external collaborations that we've talked about today.

Global Health care networks governments organizations and most reputable partners.

Key opinion leaders and influencers across our markets.

But more importantly, we feel like we have built a greater sense of purpose in our GNP work I'm confident that 2022 will be an exciting year.

We have all the pieces in place to drive towards our vision of being a champion for Greg.

Thank you for your time this evening and have a great evening.

That concludes the Perkin Elmer for fourth quarter 2021 earnings call I Hope you all enjoy the rest of your day you may now disconnect your lines.