The paragraph is an introduction to Revvity's Fourth Quarter 2024 Earnings Call. The operator, Lydia, welcomes participants and hands over to Steve Willoughby, Senior Vice President of Investor Relations. Steve introduces the call, noting the presence of Prahlad Singh, the President and CEO, and Max Krakowiak, the CFO. He reminds listeners of the forward-looking nature of some statements, mentioning that actual results may differ and that there is no obligation to update these statements in the future. Non-GAAP financial measures will also be referenced, with reconciliations available in the press release. Prahlad Singh then begins, noting significant progress made in 2024 towards Revvity's goals.

The paragraph discusses the company's positive progress and performance as it heads towards 2025, highlighting successful integration of acquisitions, operational optimization, and market innovations. In 2024, the company surpassed peers in growth metrics, achieving 6% organic growth and a better-than-expected adjusted EPS of $1.42, attributed to strong operating leverage and growth prospects. While there are signs of normalization in pharma biotech spending, particularly in consumables, full customer return to normalcy hasn't been achieved, with continued softness in high-ticket life science instruments noted in late 2024.

The paragraph discusses the company's expectations for stable demand from pharma customers as they enter 2025, with anticipated organic growth in the 3% to 5% range, indicating improvement yet below their normalized growth rate. The company plans to increase strategic internal investments, expecting a 20 to 40 basis point expansion in adjusted operating margin from 2024. This marks a third year of strong growth and margin performance. At a recent Investor Day, Revvity highlighted its significant contributions to advancing science and medicine and shared insights into their business's uniqueness and future potential.

The paragraph highlights the company's ongoing innovation efforts and strategic collaborations. It mentions the company's focus on bringing advanced solutions to market in partnership with strategic customers, including a new sample processing offering for cell and gene therapy. The company introduced new software offerings like Phenologic.AI, which have quickly gained traction in the preclinical CRO space, and has seen promising initial response to Signals Clinical and Signals Synergy. It also emphasizes the company's strong finish to the year, successful strategic partnerships, and the expansion of their collaboration with the U.K. government and Genomics England to screen newborns for rare genetic conditions.

Revvity has been selected to provide DNA extraction services for a study in the U.K., partnering with Genomics England to advance genetic research for early diagnosis of rare conditions in newborns. They have also formed a strategic partnership with Element Biosciences to commercialize a neonatal sequencing workflow, utilizing a new NGS system. Revvity, in its second year of transformation, plans to re-segment its Applied Genomics business into its Life Sciences segment by 2025, creating a new Life Science Solutions unit to enhance operational and commercial capabilities. This unit will encompass most of their Life Sciences segment, with the remainder comprising their Signals Software business.

The paragraph discusses the financial outlook and performance of the company Revvity. They plan to reflect changes in financial reporting starting with the first quarter of 2025. The company anticipates an upward trajectory going into 2025 despite some uncertainties regarding the pace of recovery throughout the year. Revvity aims to leverage its talented workforce to achieve significant advancements in science and medicine, which they believe will lead to strong financial returns for investors and patient benefits. Max Krakowiak adds that the company ended the year on a high note with strong fourth-quarter results that exceeded expectations, indicating stabilized demand trends among pharma customers. Revvity focuses on initiatives within its control, demonstrating strong financial performance through a 30.3% quarterly adjusted operating margin and substantial cash generation, while actively repurchasing $185 million worth of shares.

The company anticipates strong financial performance leading into 2025, having achieved solid results in the fourth quarter with $730 million in total adjusted revenues and 6% organic growth, surpassing expectations partly due to strong performance in the Life Sciences and Diagnostics segments. However, challenges remained in the instrumentation business and from stronger-than-expected FX headwinds affecting revenues by 1%. No contributions from acquisitions impacted the results. For 2022, total adjusted revenue reached $2.76 billion with 1% organic growth, modest FX headwinds, and a 30.3% adjusted operating margin in Q4, leading to a 28.3% margin for the year, a 30 basis point increase from the previous year. Adjusted net interest and other expenses met expectations at $17 million in Q4, totaling $43 million for the year, with a quarterly adjusted tax rate of 15.7%, bringing the annual rate to 18.4%, enhanced by tax planning initiatives.

In the fourth quarter, the company achieved an adjusted EPS of $1.42, surpassing guidance despite FX headwinds, contributing to a full-year adjusted EPS of $4.90, marking a 5% year-over-year growth. The company generated $151 million in free cash flow for the quarter and $578 million for the year, with a 96% conversion rate of adjusted net income. They repurchased $185 million in shares in Q4, totaling $370 million for 2024 and nearly $750 million over two years, and have $800 million remaining on a $1 billion repurchase authorization. The company's net debt to adjusted EBITDA ratio is 2.3. Organic revenue grew 6% in Q4, with growth noted in regions including the Americas, Europe, and Asia, especially strong in China.

The paragraph details the company's annual and quarterly performance, highlighting a 1% organic growth overall, with a 4% increase in Diagnostics and a 3% decline in Life Sciences. Regional performance showed low-single-digit growth in the Americas and Asia, with Europe and China experiencing low-single-digit declines. In China, Diagnostics grew slightly, while Life Sciences saw mid-teens growth due to high single-digit growth in reagents and consumables and double-digit growth in instrumentation. Life Sciences revenue was $336 million in the quarter, up 5% both reported and organically, though down slightly for the year. Sales to pharma biotech customers improved mid-single digits in the quarter but fell slightly over the year. Academic and government sales also showed a low single-digit increase in the quarter but declined over the year. Life Sciences instrument revenue constituted 27% of total revenue for 2024, with a significant decline in the quarter and year.

In 2024, Life Sciences revenue was primarily driven by reagent licensing and specialty pharma services, representing 57% and showing mixed growth trends, with a mid-single digit increase in the quarter but a low single digit decrease for the year due to a technology and licensing revenue decline. The Signals Software business, accounting for 16% of Life Sciences revenue, experienced over 30% growth in SaaS annual recurring revenue and a 106% net retention rate, contributing to double-digit growth in its annualized portfolio value. In the Diagnostics segment, total adjusted revenue reached $393 million in the quarter, showing 4% growth on a reported basis and 6% organically, with specific areas such as immunodiagnostics and reproductive health showing strong growth, while applied genomics faced challenges due to reduced pharma biotech spending and pandemic-related capacity expansions.

The paragraph discusses the company's financial outlook, highlighting a return to growth excluding COVID impacts for the first time since Q3 of 2022. Starting in 2025, the applied genomics business will be integrated into the Life Sciences and Diagnostics segments, making this the last quarter it will be reported separately. The company anticipates gradual improvement in Life Sciences demand and projects organic growth of 3% to 5% for the year, though political and regulatory uncertainties temper expectations. Additionally, currency exchange effects are expected to be a minor headwind to revenue and earnings per share.

The company expects its 2025 revenue to grow between 1.5% to 3.5%, reaching $2.8 billion to $2.85 billion, without contributions from acquisitions. Despite planned increases in strategic investments, operating margins are projected to expand by 20 to 40 basis points, resulting in adjusted margins of 28.5% to 28.7%. While cash generation remains strong, net interest expense is anticipated to rise to $70 million due to lower cash balances and rate cuts. Global tax reforms are expected to increase the adjusted tax rate to approximately 20%. The expected average diluted share count for the year is about 120 million, with ongoing modest repurchases.

The article paragraph discusses Revvity's financial expectations for the upcoming years. They anticipate their adjusted earnings per share for the full year 2025 to be between $4.90 and $5, with about 19% of earnings occurring in the first quarter due to a higher initial tax rate. They expect to generate approximately $500 million in free cash flow for the current year, excluding an additional $50 million anticipated from an AES divestiture. The company had a strong end to 2024 and anticipates better trends in 2025, aiming for normal growth levels in the future. Despite increased investment spending, they foresee margin expansion opportunities and enhanced growth potential. Revvity is showing its transformed financial potential and delivering significant market innovations, benefiting patients' lives. The paragraph concludes by opening the floor for a Q&A session. Doug Schenkel from Wolfe Research questions their optimistic outlook, noting Revvity's better growth and margins compared to peers, despite cautious market guidance.

The paragraph consists of a discussion between Doug and Prahlad Singh, addressing key areas of market recovery and future guidance. Doug asks about specific market recovery areas, including end markets, product categories, and geographic exposure, seeking insights on normalcy, lagging areas, and potential accelerators like funding for early-stage biopharma. He also inquires about expectations for core growth in China, especially given previous strong growth, and considers factors like economic stimulus and Volume-Based Procurement (VBP). Prahlad Singh responds by acknowledging the complexity of the questions and stating that while there's a path to recovery, the pace remains uncertain. Consequently, their guidance assumes the current environment will persist through 2025.

The paragraph discusses the company's growth expectations across various sectors, emphasizing a recent trend of mid-single-digit growth in Life Sciences reagents. The Diagnostics business is projected to grow around 6%, while the software business experiences low-double-digit growth. Life Sciences instruments, especially in China, are anticipated to recover by 2025, with overall growth expectations in China aligning with the company's average of 3% to 5%. The immunodiagnostics sector in China is expected to achieve mid-single-digit growth, despite pricing challenges. Additionally, though some stimulus-driven orders appeared in the fourth quarter, the stimulus is not expected to significantly impact the company's overall performance in 2025.

The paragraph is part of a conversation during an earnings call. Vijay Kumar from Evercore ISI asks Prahlad Singh about the company's financial guidance of 2% to 5% growth, specifically looking for details on segment performance and factors influencing the high and low ends of expectations. Prahlad Singh explains that the Diagnostics segment is expected to grow at the higher end of the company's average, while Life Sciences is anticipated to fall in the middle of the low single-digit range. He highlights that the guidance is balanced, considering current market and geopolitical uncertainties, and notes a cautious approach. Additionally, Vijay inquires about the performance of reagents, which have shown mid-single-digit growth, questioning if market share gains have contributed to this and seeking insights into reagents' growth prospects for fiscal 2025.

In this paragraph, the discussion is centered around the performance and growth prospects of the reagents business segment within a company. Prahlad Singh emphasizes that the company's reagent portfolio is gaining market share and showing positive results due to ongoing innovation. For fiscal year 2025, they expect the reagents segment to grow faster than other segments within Life Sciences Solutions, with overall Life Sciences growth projected in the low single digits and software growth in the low double digits. Vijay Kumar appreciates this information and further inquires about fiscal projections. Patrick Donnelly from Citi then asks Max Krakowiak about the lower-than-expected first-quarter guidance, particularly regarding earnings offset, margin visibility, the impact of reagents on margins, and foreign exchange effects.

The paragraph discusses expectations and projections for financial performance over the year, specifically focusing on the anticipated quarterly cadence of organic growth, operating margins, and tax rate impacts. It suggests that organic growth should remain consistent, and operating margins will start lower in Q1 but improve by Q4 due to volume leverage. Interest and other expenses should remain steady, while the tax rate is expected to be highest in Q1. Patrick Donnelly agrees that this cadence is typical. Additionally, there is a focus on ImmunoDX, with expectations of mid-single-digit growth for 2025, particularly highlighting strong performance in China. Max Krakowiak expands on this, projecting that diagnostics will achieve the upper end of mid-single-digit growth in 2025.

The paragraph discusses the performance and expectations for two segments of a company: reproductive health and immunodiagnostics. The company anticipates high single-digit growth for immunodiagnostics, with China's performance aligning with 2024 and 2025 projections, and low-to-mid-teens growth internationally, driven by innovation and geographic expansion. Michael Ryskin from Bank of America asks about the applied genomics segment, which has been challenging due to COVID-19 impacts. Prahlad Singh explains that this business is moving to the Life Sciences Solutions portfolio to better align with customer needs, as it's been slow to recover from COVID-related disruptions.

The paragraph discusses optimism about recovery in applied genomics by 2025. Michael Ryskin inquires about an operating margin expansion of 20 to 40 basis points and the effect of foreign exchange (FX) on margins. Prahlad Singh clarifies that FX does not significantly impact their margins. The lower than expected margin expansion is due to increased investments aimed at strategic initiatives. Singh mentions that with mid single-digit growth, they typically expect a 50 basis point expansion in operating margins, but current projections are slightly lower. He concludes by expressing confidence in the progress of their productivity and transformation efforts.

The paragraph discusses the company's strategic investments and financial performance. In 2024, the company expanded its operating margin by 30 basis points with only 1% growth. Looking ahead to 2025, they plan to increase strategic investments, focusing on digital advancements in e-commerce and AI, as well as expanding sales channels and entering high-growth markets outside of their traditional focus areas such as pharma and biotech. They aim to enhance their downstream commercial capabilities in areas like GMP and Omics. Michael Ryskin expresses appreciation, and Puneet Souda from Leerink Partners asks about the company's software growth, specifically regarding whether there were any one-time factors affecting the quarter's performance. Max Krakowiak confirms that software growth for the full year is in the low-double digits, with similar expectations for the first quarter.

In the paragraph, Prahlad Singh discusses the predictability of their software business, with 34% being SaaS and a significant portion reliant on multiyear on-premise contracts. The company's focus is on the net present value (NPV) of contracts annually rather than quarterly performance. Max Krakowiak highlights that their annual target value (ATV) was strong in both 2023 and 2024. Puneet Souda inquires about potential impacts from National Institutes of Health (NIH) funding challenges. Singh responds that their direct exposure to NIH is minimal, about 1%, with indirect exposure estimated at 5%. Most of their products sold are reagents and small-ticket items, mitigating potential risks.

The paragraph is a discussion between Matt Sykes from Goldman Sachs and Prahlad Singh regarding expectations for instrument sales in light of current capital expenditure (CapEx) constraints. Singh explains that their instrument portfolio is not a commodity but tailored for specific customer needs across academia, government, and pharma sectors. He highlights that any potential recovery in instrument sales will vary regionally, using China as an example where modest stimulus might counterbalance ongoing weakness in the pharma and biotech sectors. The potential for a recovery in 2025 remains uncertain, and conversations with customers about their CapEx plans continue.

In the paragraph, Prahlad Singh explains that the company is on a path to recovery in the pharma biotech sector, but they do not anticipate a sudden return to normalcy in their guidance. The Q4 exit rate was impressive, but there was no one-off impact or budget flush affecting this growth. The company sees positive signs in its Diagnostics, Software, and Life Sciences reagents businesses, indicating recovery. However, they are cautious, assuming the current market conditions will persist into 2025, with potential upside if the market improves. Matt Sykes thanks Singh for his insights, and the operator introduces the next question from Luke Sergott of Barclays.

The paragraph discusses the company's performance in the biotech sector, particularly focusing on the fourth quarter. Max Krakowiak mentions that the pharma/biotech sector showed positive growth in the fourth quarter, largely driven by strong software performance. Despite ongoing challenges, there were positive signs, particularly in the reagents portfolio, which began to show improvement over the summer as lab activity returned to normal levels. This positive trend continued through the third and fourth quarters. The company assumes this steady growth will persist into 2025, as reflected in their guidance. Luke Sergott acknowledges this information and prepares to ask a follow-up question regarding the company's guidance.

The paragraph discusses a conversation between Max Krakowiak and Luke Sergott regarding company guidance and market conditions. Krakowiak explains that despite positive indicators and momentum, the company's guidance remains conservative due to uncertainties in the geopolitical and regulatory landscapes. The focus is on creating a balanced guide for 2025 that reflects the current market environment. Andrew Cooper from Raymond James asks about customer sentiments amidst regulatory changes. The overall tone is cautious, aiming to account for potential downward pressures while recognizing positive developments.

The paragraph is a discussion about the impact of market conditions on different parts of a company's portfolio. Prahlad Singh explains that their Diagnostics and software businesses are expected to remain stable and grow as planned. The Reagents business has experienced mid-single-digit growth for two consecutive quarters, and this trend is expected to continue. The main concern is related to capital expenditure (CapEx) spending, specifically in instrumentation, which makes up less than 20% of their portfolio. The uncertainty in the market environment is impacting customer behavior, but it is hoped this will stabilize within a few quarters. The company plans to reassess their strategies mid-year if market conditions improve. Andrew Cooper then shifts the conversation to margin growth and investment levels, noting that both have been slightly lower than anticipated.

The paragraph involves a discussion on financial performance and guidance, with Max Krakowiak noting the positive progress in operating margin expansion despite strategic investments. He mentions opportunities for gross margin improvements to offset these investments. Andrew Cooper acknowledges this information. Catherine Schulte then asks about guidance and why the company anticipates steady 3% to 5% organic growth throughout the year, which seems better compared to peers but doesn't expect acceleration. Prahlad Singh responds, confirming the 3% to 5% assumption as steady, noting typically higher fourth-quarter performance, and mentions the potential for revisiting guidance later in the year if conditions improve.

The paragraph discusses the company's approach to forecasting in the current uncertain market environment, emphasizing steadiness in projections. Catherine Schulte inquires about the expectations for the pharma and biotech sectors for the upcoming year. Max Krakowiak explains that while they do not provide specific breakdowns, pharma and biotech are significant drivers of their Life Sciences business. Dan Brennan then asks about reproductive health, noting a strong finish to the year and projections for low single-digit growth next year. Krakowiak highlights that newborn screening, a major component of their reproductive health portfolio, experienced high single-digit growth in the fourth quarter and is expected to continue being the fastest-growing segment in 2025.

In the paragraph, Dan Brennan and Prahlad Singh discuss the potential impact of geopolitical and regulatory factors on spending in the pharmaceutical industry. While Singh indicates there is no immediate slowdown in customer spending, he emphasizes the need for prudence in forecasting due to environmental uncertainties. Singh hopes for a return to normalcy, which could offer positive outcomes, but stresses cautious guidance for the year. The exchange concludes with Steve Willoughby thanking participants and concluding the call.

This summary was generated with AI and may contain some inaccuracies.