Revvity Inc (RVTY) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2011 PerkinElmer, Inc. earnings conference call. My name is Francine and I am your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions).

I would now like to turn the presentation over to your host for today's call, Mister Dave Francisco, Vice President of Investor Relations. Sir, you may proceed.

Thank you, Francine. Good afternoon and welcome to the first-quarter 2011 earnings conference call. With me on the call are Rob Friel, Chairman and Chief Executive Officer, and Andy Wilson, Senior Vice President and Chief Financial Officer.

If you have not received a copy of our earnings press release, you may get one from the Investor section of our website at PerkinElmer.com or from our toll-free Investor Hotline at 1-877-PKI-NYSE. Please note this call is being webcast live and will be archived on our website until May 19, 2011.

Before we begin, we need to remind everyone of the Safe Harbor statements we have outlined in our earnings press release issued earlier this afternoon and also those in our SEC filings. Any forward-looking statements made today represent our views only as of today. We disclaim any obligation to update forward-looking statements in the future even if our estimates change. So you should not rely on any of today's forward-looking statements as representing our views as of any date after today.

During this call, we will be referring to (technical difficulty) GAAP financial measures. A reconciliation of the non-GAAP financial measures we plan to use during this call for the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent we use non-GAAP financial measures during this call that are not reconciled to GAAP in that attachment, we will provide reconciliations promptly.

I am now pleased to introduce the Chairman and Chief Executive Officer of PerkinElmer, Rob Friel.

Thanks, Dave. Good afternoon, everyone, and thank you for joining us. I am pleased to report that PerkinElmer had a very successful start to the year as we delivered excellent financial results while continuing to fund strategic investments supporting our longer term growth initiatives.

Looking at the first quarter, we generated very strong growth in revenue and adjusted earnings per share exceeding both our top and bottom line guidance that we shared with you in February. Reported revenue was up 14%, organic revenue grew 10%, adjusted operating profit margins expanded 160 basis points, (technical difficulty) earnings per share grew 36%.

Andy will provide the specific details on our financial performance. However, in summary, the growth we experienced in the first quarter was attributable to improving end markets, growth from new products, continued strength in emerging territories, and our efforts to focus the Company on fewer, more attractive market (technical difficulty) applications.

Furthermore, the emphasis we are placing on expanding our operating margins was apparent in the quarter as we experienced very good flow through from the incremental revenue despite headwinds from an unfavorable mix. The 160 basis points increase over first quarter of last year reinforces our belief that we can achieve adjusted operating profit margins in the high [teens by] 2014.

Just as important as a strong financial performance in the quarter, we also made very good progress on increasing the growth profile of the Company through internal investments as well as external collaborations and acquisitions.

In the first quarter, we continued to expand our capabilities within selective geographies and applications. This is (technical difficulty) on increasingly stringent environmental regulations and the growing demand for greater access to healthcare in emerging territories, particularly related to newborn, maternal health and infectious disease.

During the quarter, we funded a series of investments targeted at providing our customers with better tools to advance human and environmental health. In particular, several of our new product innovations provide customers with multiple modes of operation within one instrument, creating a more efficient lab environment. Three of these multimode innovations are the label-free EnSpire plate reader which helps scientists to enable discovery of potential new therapeutic targets; the Spectrum Two infrared analyzer which provides better near and midrange infrared capabilities for characterizing chemical and biological materials; and the NexION ICP-MS system which advances trace element analysis through three modes of operation for better food and water analysis.

I'm also pleased with our (technical difficulty) leverage adjacencies in the diagnostics and therapeutic markets with new applications such as Oncochip, a new microarray technology to aid in faster, earlier, and more accurate diagnosis of hematological malignancies. Additionally, we have expanded our core blood banking business to include umbilical cord tissue banking services which will help to provide patients more options in new cell therapies.

And finally, we introduced our new epigenetics-based detection reagents which helped to accelerate drug discovery research for novel therapeutic strategies for diseases such as cancer, diabetes, and Alzheimer's. In the first quarter, we also made a number of strategic acquisitions that increase our ability to address our customers' growing needs.

While each of the acquired businesses brings us unique capabilities, the acquisitions are targeted on two critical areas. The first area is the need for better tools to interpret and manage the vast amounts of data that laboratories generate every day. Through the CambridgeSoft and ArtusLabs acquisitions, we will have the capability of providing a robust informatics platform that will enable customers to maximize their laboratory efficiency and harness critical information and insights.

In addition, we can provide our customers with the ability to rapidly access and share enterprise wide data for faster, more informed scientific decisions.

The secondary of increased investment was in the area of DNA analysis with the intention of complementing our current capabilities in protein-based analysis. Increasingly, our customers want to perform experiments that look at both proteins and genes. Therefore we are selectively adding to our existing competencies as we did with our purchase of Signature Genomics in 2010.

This year, we have broadened our DNA analysis footprint in sample prep, bioinformatics and DNA sequencing. We accomplished through the purchase of Chemogen, which provides a complete solution to nucleic acid sample preparation, the acquisition of Geospiza (technical difficulty) earlier today, which is a bioinformatics software company focused on sequencing, and the launch of our Next Generation Sequencing Service.

As a result of these acquisitions and repurchasing 7 million shares in the open market over the last quarter -- two quarters -- we have reinvested approximately 90% of the divestiture proceeds from the sale of the Illumination and Detection Solutions business. I am pleased that we have redeployed the capital in a way that should allow us to achieve the high end of our original guidance of $0.07 to $0.11 accretion while increasing our recurring revenues and significantly expanding our scale in critical growth drivers for the Company.

In closing, I believe that we are off to a strong start, that the organization is executing well against our operating priorities as well as continuing to invest for long-term profitable growth.

As a result, we have decided to raise our adjusted EPS guidance for the year to $1.62 to $1.67 with the midpoint representing a 24% increase over 2010. I will now hand the call over to Andy who will discuss our end market and financial performance in greater detail.

Thanks, Rob, and good afternoon, everyone. I will now provide some additional details in our first-quarter results and following my prepared remarks, we will open it up for questions.

Before moving into the financial details, I would like to clarify that whenever I talk about a particular measure being up or down, I am referring to an increase or decrease in that measure during the first quarter of 2011 compared to the first quarter of 2010. As Rob just discussed, we had another strong quarter of revenue and adjusted earnings growth.

Revenue for the first quarter increased by 14% and organic revenue increased by 10% as compared to the same period last year. By segment, organic revenue increased by 2% in Human Health and 17% in Environmental Health. Recurring revenue, which includes reagents, consumables, and services, represented approximately 56% of total revenue in the quarter with organic revenue growth at a mid-single-digit rate.

Instruments and components represented approximately 44% of total revenue in the first quarter with organic revenue growing in the high teens. We experienced strong organic revenue growth across all major geographies with the Americas and Europe growing at high single-digit rates and Asia growing high teens.

Additionally, as Rob mentioned, our focus on emerging markets continues to gain traction with almost a quarter of our total revenue now coming from these key regions and growing at a double-digit rate in the quarter. From an end market perspective, PerkinElmer's Human Health segment represented approximately 45% of total revenue in the quarter. Within this segment we serve two end markets, diagnostics, which represented 27% of total revenue, and research, which represented 18% of total revenue.

Organic revenue from our diagnostics business grew at a mid-single-digit rate in the first quarter with contributions from our screening business more than offsetting a modest decline of our medical imaging business as it cycled up against very difficult prior year comparisons.

In our screening business, we experienced growth across all major geographies. Within the US, growth was primarily due to the timing of certain shipments in the quarter as birth rates in the US continued to decline at a low single-digit rate. Outside of the US, we continue to benefit from an increasing adoption rate for our neonatal and infectious disease screening offerings, particularly in emerging markets.

Organic revenue in our medical imaging business declined at a low single-digit rate in the quarter. Robust demand in adjacent markets including industrial and veterinary were offset by declines in the base business, a result of very difficult comparables in the prior year. The success we achieve in adding new OEM customers in adjacent markets has helped reduce the cyclicality of the business through the diversification of our customer base for this key imaging technology.

Organic revenue in our research business declined at a low single-digit rate in the first quarter as we experienced continued healthy demand in the academic sector as early-stage therapeutic researchers continue their efforts to optimize screening deficiencies in the lab. In particular, we saw strong demand for our Operetta cellular imaging systems and EnSpire multimode plate readers, both of which have targeted features and price points aligned with the needs of our academic customers. These technologies, coupled with our automated sample preparation systems, provide a compelling, high throughput solution for this key customer segment.

Offsetting growth in the academic sector was a decline in organic revenue within large pharma. This decline was primarily related to a larger than anticipated contraction in our legacy radioisotope portfolio. However we were encouraged by growth in both non-rad reagent and [histamines] supporting our high throughput screen offering.

We expect positive growth in the reagents segment for the full year and believe we are well positioned to benefit from the geographic shift of research to Asia, global investments targeting preclinical research, as well as what we believe are improving trends in the pharmaceutical segment.

Now let's turn to Environmental Health, which represented 55% of our total revenues in the first quarter. Within Environmental Health, we serve three markets -- laboratory services which represented 24% of total revenue; environmental and safety which represented 21%; and industrial which represented 10% of total revenue.

Organic revenue in our lab services business low double digits (technical difficulty) first quarter as our one source business once again posted strong topline growth as this unique comprehensive service offering continues to expand globally. Organic revenue in our environmental and safety markets grew over 20% in the first quarter as increased environmental and food safety regulations continue to drive strong demand for our analytical technologies.

During the quarter, we saw strength in our inorganic analysis solutions used for detecting trace metal contaminants in food and environmental applications. Revenues from our NexION 300 ICP MS more than doubled versus the first quarter 2010 as this highly efficient multimode instrument continues to gain share in these markets.

Additionally, our gas chromatography offering grew low double digit in the period, driven by ongoing reserves around food additives and adulterants as well as pesticide contaminants in both food and water.

Finally, organic revenue in our industrial market grew over 20% in the first quarter. We are seeing strong demand in industrial applications due in part to the cyclical recovery and the timing of demand fulfillment. We also experienced significant growth in our GC engineered solutions and our new Spectrum Two infrared instrument used in chemical and petrochemical applications.

Looking at our overall financial performance, adjusted operating margins expanded 160 basis points in the first quarter to 13.2%. In the quarter, we benefited from healthy incremental flow through on strong sales, a result of productivity improvement and the benefit of prior year restructuring actions, partially offset by unfavorable product mix and growth investments executed in the period.

In our Human Health segment adjusted operating margins were 17.9%, representing an increase of 40 basis points as compared to the same period a year ago. Productivity gains in Human Health were partially offset by acquisition integration-related costs and growth investments.

In our Environmental Health segment, adjusted operating margins were 13.6%, representing an increase of 240 basis points as compared to the first quarter of 2010. Within the segment we experienced healthy volume leverage, a favorable product mix as well as solid productivity gains including the realization of the expected benefits related to the SCIEX integration.

GAAP operating profit was $39.3 million in the first quarter of 2011 versus $30.6 million in the first quarter of 2010. For the first quarter, we had a GAAP tax rate of 22.9% and on a non-GAAP basis our adjusted tax rate was 26.9%, which is consistent with our guidance communicated in February.

GAAP EPS from continuing operations in the first quarter of 2011 was $0.22 compared to $0.17 in the first quarter of 2010 while our adjusted EPS was $0.34 in the first quarter of 2011, up 36% from the prior year. Our weighted average diluted share count for the first quarter of 2011 was approximately 115.1 million shares.

Turning to the balance sheet, we finished the first quarter with approximately $100 million of net debt which we define as short (technical difficulty) debt minus cash. This reflects an increase in net debt of approximately $94 million as compared to the fourth quarter of 2010 due primarily (technical difficulty) market repurchases of 4 million shares and payment for acquisitions completed during the period.

At the end of the quarter, we had approximately $416 million of cash.

Looking at our cash flow performance for the quarter, operating cash flow from continuing operations was $47.3 million as compared to $51.2 million in the first quarter of 2010. This modest year-over-year decline in the quarter was primarily the result of an unfavorable tax impact associated with the sale of IDS. Excluding this impact, adjusted operating cash flow increased [7]% in the period.

In summary, we are pleased with our financial performance for the quarter as we continue to drive strong revenue and adjusted earnings growth. now I would like to discuss our second-quarter and full-year 2011 guidance.

Consistent with our views expressed earlier in the year, we anticipate conditions for the remainder of 2011 to remain solid. We are forecasting a similar demand profile in environmental food safety testing, lab services and academic research, but we expect growth rates to moderate due to more challenging comparables for the balance of the year.

Additionally, we expect our screening business to generate more normalized growth rates in the back half of the year as birth rates in the US begin to recover. Accordingly, we are forecasting organic revenue to grow in the mid-single-digit range for the full year as well as for the second quarter.

Regarding adjusted operating margins, we now expect expansion to be at the high end of our range of our stated objectives of 75 to 100 basis points for all of 2011. This expansion will be driven primarily by volume leverage and continued traction on our multiyear productivity initiatives offset by growth investments to ensure the sustainability of our long-term financial performance.

Additionally due to the timing of revenue recognition of the existing CambridgeSoft contracts, we expect the majority of its full year profits to be realized in the fourth quarter. As Rob mentioned, we have redeployed approximately 90% of the proceeds from the divestiture of the illumination and detection solutions business to highly productive assets. We will continue to look for opportunities to deploy capital in accordance with our strategy but are no longer required to do so to achieve our full-year guidance.

Bringing these factors together, we estimate our full-year adjusted earnings per share for 2011 to increase from the previously communicated range of $1.56 to $1.64 to a new range of $1.62 to $1.67, representing growth of 22% to 26% over the prior year. Additionally, we expected adjusted earnings per share for the second quarter to be in the range of $0.38 to $0.40 representing growth of 15% to 21% as compared to the second quarter of 2010.

This concludes my prepared remarks. I will now turn the call back over to Dave.

Thanks, Andy. Operator, at this (technical difficulty) we'd like to open the call to questions, please.

(Operator Instructions). Quintin Lai from Robert W. Baird.

Good afternoon. Congratulations on the good start to the year.

Thank you.

Couple questions here. So, first housekeeping-wise. The guidance that you gave, is that now inclusive of these acquisitions that you just made?

it is.

And when I was looking through the press release you didn't talk really about the financial impact. I assume that revenue is not a big deal, but earnings-wise was there like a -- is there any kind of modest dilution, relative to that?

If you look at the acquisitions in total, we anticipate that they are going to generate about $0.05 of EPS for the year and our buybacks are going to be about 5%, as well. I think there will be some upfront costs associated with the acquisitions, but I don't see any significant solution as a result of these.

Great. Thank you for that. And then with respect to kind of your comments on the pharma side. You mentioned that you expect consumable business to pick up. Was it -- is that a trend that you have been seeing maybe now that the first quarter is over and we are into the second quarter or could you maybe give a little color on what you are expecting as the pacing goes through the year?

Yes. I would say in the first quarter what we saw was some growth on the screening side, [hydroprotrene], we saw both on the academic side as well as the pharma which was great to see. Because as you know for most of 2010 there was a lot of investment going into screening. So it was nice to see. We saw strength both on the plate readers as well as on the reagent side.

Andy mentioned the fact that however offsetting that was affected our rad business contracted a little bit more than what we've seen historically and we think that's somewhat timing-related. But we will just have to wait and see how that pans out for the rest of the year. So I would say when I think about the research market, we're starting to see some recovery on the screening side in pharma and both academic. So that's the good news.

The offset to that is we are seeing pressure on the radioactive side of our business. But as Andy said, we are expecting the research business to be positive for the year probably low to mid single digits.

And last question for me and I will jump back. Andy, (technical difficulty) guidance for the year, did you give an updated expectation for share count for the full year?

We did not. but it's going to be about 114 million shares.

Isaac Ro from Goldman Sachs.

Good afternoon. Thanks for taking the question. First one just sort of on acquisitions. Could you maybe give us what you assume the total revenue contribution will be in dollar terms from acquisitions for the year?

It's about $75 million all in.

Got it. And then in terms of just looking at all the activity you guys have had in acquisitions here. Total mix of business that you would characterize as software and/or service I think it was historically about 30%. Where is that going to be as you exit the year and then over time should we assume that incremental M&A could take the Company more in to that direction?

Well, so as Andy mentioned, the acquisition which basically what we've done so far is largely in either the service software side or consumables. So the majority that. So $75 million so figure that is almost 4% of our revenue. And so that would be the increase, relative to what we had last year.

Right and if we just think longer term is there maybe a more concerted strategy to have a very comprehensive software offering, informatics offering. It looks like you guys have bought some interesting assets here and I am just curious about your thoughts on (multiple speakers).

Yes, I think that's right. I think we said for some time that we obviously want to drive to a more recurring side of revenue. We sort of increased over the last couple of years from 50% to 60%. Now we will be pushing 65%. But we see informatics as a real opportunity and I would say there are a couple of drivers to that.

First of all, clearly, the consolidation that is going on is requiring our customers to have better connection between their scientific efforts whether it is the outsourcing of R&D [that arose] that are requiring the ability to share information seamlessly whether it's a focus on productivity or whether it's just a fact that the instrumentations are continuing to generate more and more information. And there is a real need to be able to search, analyze, store and share that information.

So we think consistent with what we've done with our service offering, there's a huge opportunity to help our customers sort through this need to have a much better informatics platform. And so, we did CambridgeSoft as think about a sort of backbone, brings in a very strong electronic notebook. ArtusLabs brings us some fairly good capability around imaging. They've got some particularly technology around optical structure recognition and then of course Geospiza just brings us cloud computing and some real good capabilities around the sequencing which is complementary to our sequencing service.

That's very helpful. Thank you.

Peter Lawson, Mizuho Securities.

Just wondered if you X out that radiochemical business did the pharma business decline or was it flat?

Well if you X out the rad business, our non-rad business grew sort of mid-single digits and that would be a combination of pharma and academic. So the non-rad piece of the portfolio was, actually like I said, up I think it was 5% or 6%.

And then but just if you parse out the pharma side of things, how does that fare?

You know I would say that pharma still grows, but again because we are looking at it a little differently we don't really separate the end markets from rad and non-rad. I would say pharma still probably grew a little bit, but over all it was about mid-single digits.

And then, the acquisition announced today, the Geospiza, could you walk through the synergies that will have with the Next Generation business and will the products be sold as standalone or are they just -- are they going to be kind of rolled into the current (multiple speakers) --?

Well, we have actually been partners with Geospiza since we started our sequencing business. So we know the business well. And I would say it's synergistic since there are two areas. It's synergistic since sort of the early part of the sampling process tracking and then it's synergistic on the analysis side.

And like I said we've been working with them since we started it so as you think about it, they provide us synergies in the up front side. Then of course the sample prep and automation is going to be Chemogen and some of our other products whether it's the JANUS Automated Workstations or the EnSpire plate readers. Then we will use some other products that do [XON] capturing and sequencing and then of course we use the Geospiza software for the analysis.

Okay. Thank you so much.

Dan Leonard from Leerink Swann.

Thanks. I'll start with a housekeeping question. What was the share count at the end of the quarter?

115.

That was average during the quarter, right? Not -- that isn't how you ended the quarter, I would assume?

That's correct. That's right.

Okay. On the scientific software market, could you walk me through how you are viewing that market in terms of the size of the overall opportunity, the growth rate of that market, the competitive environment?

Yes, so I would say the scientific -- if you look at -- you've got to separate it into a couple different pieces. But I would say if you look at the EON market, CambridgeSoft was probably the third largest provider in that market. I think we picked up a very nice position there, relative to electronic notebook, and then I said that the approach there is to add into that imaging capability. And then ultimately I think that is got to be put on a cloud application and I think that is one of the true benefits of Geospiza.

I would say growth wise it's probably been growing in sort of low double digits and that would be our expectation going forward.

Okay. And then finally can you talk your plans to integrate these different software businesses? Would you expect that you will integrate them and they are going to operate as one team or are they going to stand as separate entities?

Well, I would say initially the ArtusLab and the CambridgeSoft will be integrated because I think there's some real synergies between those two. Probably Geospiza initially will be, sort of alluded to before, will be more focused on the DNA sequencing business and then of course over time we will look at a [Soft way] strategy across PerkinElmer.

The other thing to point out is the PerkinElmer has a number of [informatics] products today. So whether it is on the cellular imaging side or whether it's in the lab information management systems within our analytical sciences business. So we are looking across all of our capabilities in PerkinElmer and we will ultimately probably have an integrated software business.

But I would say that's down the road.

Jon Groberg from Macquarie.

Thanks for taking the questions. Just a quick question. What percent of your Environmental Health revenues are from emerging markets?

So emerging markets for the Company is about 25%. So I don't know -- Andy, do you know what it is for emerging (multiple speakers)?

I can -- I will find it and get that.

I would say it's probably higher than that because it's higher on the Environmental side than it is on the Human Health side.

Yes, I was going to say around 30%. But I will confirm that.

And then, Rob, obviously you've made some small acquisitions here. It was rumored that you were in the market for potentially a larger, more transformative acquisition. I guess, what is your appetite for larger M&A at this point?

I would say our strategy has been for the last couple of years to do more tuck ins. And I would say that's going to be the start of the majority of the strategy going forward. (technical difficulty). I mentioned in the past that maybe a little bigger than what we have done historically. I think if you look at the average deal that we've done in the past couple of years it's probably been sort of more in the $50 million range. I'd like to do a little bigger than that. CambridgeSoft, as you know, was sort of in the $200 million range. So I'd like to do bigger deals, but unlikely we'd do something very large.

Okay and then last question for me, on Geospiza, just so I'm clear, it looks like with the previous acquisitions you said about $0.04 accretion. So is this maybe $0.01 is a way to look at it? And then could you maybe just give us some details? You know it's not that long ago since you've launched the targeting -- or launched the sequencing service, kind of what demand you've seen to date? How big is it? Kind of what your expectations are for that business?

I would say the $0.04 that you recall was really when we talked about the CambridgeSoft and ArtusLabs. Actually the Geospiza has sort of minimal impact on our EPS. The other penny is largely coming from Chemogen. So I think when you look at all the acquisitions together it is about $0.05. And as Andy said probably about $0.05 from our share of buyback.

The DNA sequencing business I would describe as sort of early days. I think we're getting some good traction with our customers. I think it could (technical difficulty) exciting opportunity from a market perspective, but like I said it's early days for us and it's -- I would say through the first quarter it's still less than $1 million of revenue. What I would say is that we see it as an exciting opportunity, but I don't think it's going to be meaningful from a financial perspective for some time.

Would you mind just one other quick question on that? Do you find that your customers are coming in and just saying, this is what we would like to do, you do it anyway you want or do your customers -- are they more specific in terms of, we would like you to use X technology to run this particular project for us?

They are not being specific to technology.

They are not. Okay.

No.

Thanks.

Paul Knight, from CLSA.

Where are you with the integration of Signature Labs, SYM-BIO, and all the diagnostic businesses? I mean, are you halfway there, three quarters of the way there?

So I would say SYM-BIO, I would say is fairly well integrated within PerkinElmer. And so I would say we're almost all the way there on SYM-BIO. I would say Signature, we are more than halfway there, but we're still sort of working through some integration plans there. But I would say SYM-BIO, close to 100%. SYM-BIO probably north of 50 -- I mean Signature north of 50%.

And this high teens operating margin, that is by 2014 or in 2014?

It's by 2014.

And as I look at Human Health and Environmental Health, would it -- would both businesses rise about the same or is one going to go up more than the other?

Well, the challenge we have given each of the businesses is productivity improvement that is fairly homogeneous across the segments. But I think ultimately you're going to see Human Health width margins with the two in front of it and Environmental Health more of a midteens. So you kind of have to blend it in the high teens. But I think the targets we set for the two groups and the opportunities we see within the two segments are fairly -- fairly similar.

Okay. Thanks.

(Operator Instructions). Jon Wood from Jefferies & Company.

(technical difficulty) Jon tonight. Should we anticipate M&A activity moderates through the balance of the year following the recent transactions? And then Andy looks like the 114 million share count guidance contemplates incremental share repurchases over the coming quarters. Is that accurate?

No, it is not.

I would say I think we'll continue to look for bolt-on acquisitions. I think we've got a strong ballot sheets and we can continue to do a couple hundred million if we saw the appropriate target. So I don't know that I would say it necessarily moderates. It will be more dependent on seeing the opportunities and obviously transactions that make sense from a financial and strategic perspective.

Thanks. And Andy, any chance you could give us the aggregate value of the acquisitions completed in the second quarter for the purposes of our cash flow forecast?

Sure. Of the 4 acquisitions it's approximately $260 million.

Okay. Great. Thanks.

Ross Muken from Deutsche Bank.

This is Vijay in for Ross. I just had one question. I know you sort of mentioned strength and ICP MS and GC. Could you sort of talk about comparative dynamics out there. Do you feel like you're gaining share in those markets and, you know, what you're seeing? Thank you.

So I think the strength is really coming from two aspects of it. One is obviously the markets are very strong because of the concern about some of the regulatory issues out there. I think the other thing is we have introduced some new products recently that are getting very good traction in the markets. So I think it's a combination of the strong market and the new products and I suspect we are executing quite well.

Thank you. That's it for me.

Paul Knight from CLSA.

Andy, what was the topline guidance for Q2?

Mid-single digit. And that is also the guidance for the year.

And that would be total. What kind of the range on absolute revenue levels?

Absolute dollars?

Yes.

I don't have that off the top of my head. Dave, do you have it?

That's okay. Thanks.

All right.

Isaac Ro from Goldman Sachs.

One housekeeping item on FX for the balance of the year, top line, bottom line impact. You guys able to share a view there?

The balance of the year, we think it is going to be a tail wind of about 4% but de minimus on the bottom line just given our mix.

Okay, and then one other one just sort of longer term, Andy, as we look at the operating guidance you've given. You guys have obviously acquired some higher growth businesses. How much of that target is sort of contingent on continued acceleration on the top line versus some more significant operating increment you guys have in the works?

I think what we've communicated is for us to hit our high teens operating margin by 2014 requires us to generate about 5% organic growth going forward, the balance of that being productivity improvement. So obviously if we do better than that, hopefully, we will get there faster. We may reinvest, as you know. If we do worse we will probably have to do some more heavy lifting, but that is the mix right now.

That's helpful. Thanks so much.

You're welcome.

We have no further questions in the queue. I would like to turn the call over to Mister Friel for closing remarks.

Great, so thank you for your questions. As we move into the second quarter, our priorities will remain focused on growth and employing a dedicated approach for improving our operating margins while investing in new technology software and services that advance Human and Environmental Health.

During our next earnings call I look forward to discussing our second quarter performance and how we are progressing against our priorities. Thank you for your participation today on the call and continued interest in PerkinElmer. Have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a great day.