• Total Adjusted Revenue: $684 million in Q3, 2% organic growth.
• Adjusted Operating Margin: 28.3%, up 80 basis points year-over-year.
• Adjusted EPS: $1.28, $0.16 above expectations.
• Free Cash Flow: $135 million in Q3, 100% conversion to adjusted net income year-to-date.
• Share Repurchase: $154 million worth of shares repurchased in Q3.
• Life Sciences Segment Revenue: $301 million, 3% organic decline.
• Diagnostics Segment Revenue: $383 million, 5% organic growth.
• Full Year Organic Growth Outlook: 0% to 1%.
• Full Year Revenue Outlook: $2.75 billion to $2.77 billion.
• Full Year Adjusted EPS Guidance: $4.83 to $4.87.
• Full Year Free Cash Flow Expectation: Approximately $550 million.

• Warning! GuruFocus has detected 9 Warning Sign with RVTY.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revvity Inc (NYSE:RVTY) reported better-than-expected total revenue, adjusted operating margin, and adjusted EPS for the third quarter of 2024.
• The company achieved an 80 basis point increase in adjusted operating margins year-over-year, reaching 28.3% in the quarter.
• Revvity Inc (NYSE:RVTY) generated $135 million of free cash flow in the quarter, achieving a 100% conversion to adjusted net income year-to-date.
• The company remains optimistic about the stabilization of market trends, particularly in the diagnostic and life science reagents and software businesses.
• Revvity Inc (NYSE:RVTY) announced a new $1 billion share repurchase authorization over the next two years, reflecting strong cash flow performance and balance sheet stability.

Negative Points

• Revvity Inc (NYSE:RVTY) experienced continued delays in instrument purchasing in China, impacting their fourth-quarter outlook.
• The company adjusted its full-year organic growth outlook to a range of 0% to 1%, down from previous assumptions.
• Life Sciences segment saw a 3% decline in organic revenue, with instruments underperforming, particularly in China.
• The company noted a more subdued end-of-year spending environment for instrumentation from pharma customers.
• Applied Genomics business declined in the low single digits, although it showed signs of stabilization.

Q & A Highlights

Q: Can you break down the changes in the quarter that impacted your 4Q outlook, particularly regarding instruments and the pharma/biotech sector in China and globally? A: The change in our organic growth assumption from 2% to 0%-1% is driven by the instrumentation sector. Weaker performance in Q3 and a reduced outlook for Q4 seasonality are key factors. The pharma/biotech sector, especially in China, was a significant factor, with customers pausing purchases as they await stimulus. The U.S. market is returning to normal faster than others. - Maxwell Krakowiak, CFO

Q: Given the current environment, is 4% to 5% organic growth a reasonable starting point for 2025? A: We will provide guidance for 2025 during our Q4 call. It seems the worst is behind us, and demand is recovering. We need to assess the rate of recovery and normalization, which we expect to continue into the first half of 2025. - Prahlad Singh, CEO

Q: What happened with instrumentation and Applied Genomics in the quarter, and is the Q4 guide conservative enough? A: We are seeing sequential improvement, indicating stabilization. The path to normalization may take longer, leading to lower instrument expectations for Q4. In China, delays in stimulus funding have affected instrument sales, which we now expect to improve in early 2025. - Prahlad Singh, CEO

Q: How should we think about share repurchases given the new authorization? A: We plan to remain active with share repurchases, supported by strong cash flow and balance sheet stability. The new $1 billion authorization reflects our confidence in future performance and potential investor awareness. - Prahlad Singh, CEO

Q: Can you elaborate on the trends in reproductive health, particularly in China? A: The year of the dragon has helped, but improvements in birth rates are more subdued than in previous cycles. We expect gradual improvement as the government remains focused on this area. Newborn screening grew in low double digits globally, with China contributing high single-digit growth. - Prahlad Singh, CEO and Maxwell Krakowiak, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.