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. [Operator Instructions] We’d now like to turn the presentation over to your host for today's call, Mr. 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 Investors Section of our website at www.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’ve 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 certain non-GAAP financial measures. A reconciliation of the non-GAAP financial measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release. 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'm 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'm 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, it was up 14%. Organic revenue grew 10%. Adjusted operating profit margins expanded 160 basis points and adjusted 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 segments and 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 selected geographies and applications. This is allowing us to capitalize on increasingly stringent environmental regulations and the growing demand for greater access to health care in emerging territories, particularly related to newborn, maternal health and infectious disease. During the quarter, we funded a…

Thanks, Rob, and good afternoon, everyone. I'll now provide some additional details on our first quarter results. And following my prepared remarks, we'll open it up for questions. Before moving into the financial details, I'd like to clarify that whenever I talk about a particular measure being up or down, I'm 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 growing 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 2 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…

Thanks, Andy. Operator, at this time, I think we'd like to open the call to questions please.

[Operator Instructions] Our first question comes from the line of Quintin Lai from Robert W. Baird.

A couple of 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’s not a big deal. But earnings-wise, was there like a -- is there any kind of modest dilution relative to that?

Well, if you look at the acquisitions in total, we anticipate they're going to generate about $0.05 of EPS for the year, and that 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 dilution as a result of these.

And then with respect to kind of your comments on the pharma side, you kind of mentioned that you expect the consumable business to pick up. Is that a trend that you've been seeing maybe now that the first quarter is over and we're into the second quarter? Or can you maybe give a little color on what you're expecting as the pacing goes through the year?

Yes. I would say, in the first quarter, Quin, what we saw was some growth on the screening side [indiscernible]. We saw it 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 screen. 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 the fact that our rad business contracted a little bit more than what we've seen historically. And we think that’s somewhat timing-related, but we'll 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 academics. 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.

All right, and the last question from me and I'll jump back, Andy, the guidance for the year, did you give an updated expectation for share count for the full year?

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

Our next question comes from the line of Isaac Ro from Goldman Sachs.

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

Yes, 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 kind of take the company more into that direction?

Well, so as Andy mentioned, the acquisitions, which basically -- what we've done so far is largely in either the service software side or consumables. So the majority of that. So $75 million -- so figure that's 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 and informatics offering? It looks like you guys have bought some interesting assets here and just curious about your thoughts on what...

Yes, I think that's right. I think we've said for some time that we obviously want to drive to a more recurring side of revenue. We've sort of increased over the last couple of years from 50% to 60%. Now we'll be pushing through to 65%. But we see informatics as a real opportunity. And I would say, there's a couple of drivers to that. First of all, clearly, the consolidation that's going on is requiring our customers to have better connection between the scientific efforts, whether it’s the outsourcing of R&D, the CROs 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's 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. Let's think about it sort of a 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 brings us cloud computing and some real good capabilities around sequencing, which is complementary to our Sequencing Service.

Got it, that's very helpful.

Our next question comes from the line of Peter Lawson from Mizuho Securities.

I 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 did that fit?

I would say that pharma still grows. But again, because we're looking at it a little differently, we don't really separate the end markets from rad and non-rad. I would say pharma, so far, we grew a little bit. But overall, 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 were the products we sold, standalone or are they going to kind of rolled into the current...

Well, we've actually been partnering with Geospiza since we started our Sequencing business. So we know the business well. And I would say, it’s synergistics in sort of 2 areas. It’s synergistics in sort of the early part of the sample and process tracking. And then it’s synergistics 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 the synergies in the upfront side. Then of course, the sample prep and automation is going to be chemagen and some of our other products whether it's the JANUS Automated Workstations or the EnSpire Plate Readers. Then we'll use some other products to do XON capturing and sequencing and then, of course, we'll use the Geospiza software for the analysis.

And our next question comes from the line of Dan Leonard from Leerink Swann.

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 -- it isn't how you ended the quarter, I would assume.

That's correct.

Okay, on the scientific software market, could you walk me through how you're 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 of different pieces. But I would say, if you look at the EON market, CambridgeSoft was probably the third largest provider in that market. So I think we picked up a very nice position there relative to electronic notebook. And then I said that the approach there is to sort of add in to that imaging capability and then ultimately, I think that's got to be put on a cloud application. I think that's one of the true benefits of Geospiza. I would say, growth wise, it's probably been growing in the sort of low double digits. And that would be our expectation going forward.

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

Well, I would say, initially, the ArtusLabs and the CambridgeSoft will be integrated because I think there's some real synergies between those 2. Probably Geospiza, initially, will be – as I've sort of alluded to before, will be more focused on the DNA Sequencing business. And then of course, over time, we'll look at a software strategy across PerkinElmer. The other thing to point out is PerkinElmer has a number of informatics products today. So whether it's on the cellular imaging side or whether it's in the lab information management systems within our analytical sciences business. So we're looking across all of our capabilities in PerkinElmer. And we'll ultimately probably have an integrated software business. But I would say, that's down the road.

And we also have a question from the line of Jon Groberg from Macquarie.

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, you know what it is for emerging?

No. I can -- I'll 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'll confirm that.

Okay, 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’s 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 sort of majority of the strategy going forward. I mentioned in the past it may be a little bigger than what we've done historically. I think if you look, the average deal that we've done in the past couple of years has 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 -- I think with the previous acquisitions, you said about $0.04 accretion? So is this maybe at $0.01? Is the way to look at it? And then could you maybe just give us some details, it's not that long ago since you launched the target -- or launched the Sequencing service. Kind of what demand you're seeing to date? How big is it, kind of what your expectations are for that business?

So I would say, I think 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 $0.01 is largely coming from chemagen. So I think when you look at all the acquisitions together, it's about a $0.05. And then as Andy said, probably about $0.05 from our share 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 be an exciting opportunity from a market perspective. But like I said, it's sort of early days for us. And I would say, through the first quarter, it's still less than $1 million of revenue. But I would say, 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'd like to do, you do it anyway you want." Or do your customers -- are they more specific in terms of "We'd like you to use X technology to run this particular project for us."

They are not being specific to technology.

They're not? Okay, thanks.

We have a question from the line of Paul Knight from CLSA. Paul Knight - Credit Agricole Securities (USA) Inc. 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're 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%. Paul Knight - Credit Agricole Securities (USA) Inc. And this high teens operating margin, that is by 2014 or in 2014?

It's by 2014. Paul Knight - Credit Agricole Securities (USA) Inc. And as I look at Human Health and Environmental Health, would both businesses rise about the same? Or is one going to go up more than the other?

Well, the challenge we've given each of the businesses is productivity improvement. It's fairly homogeneous across the segments. But I think, ultimately, you're going to see Human Health with margins with a 2 in front of it and Environmental Health with kind of more of a mid teens. So you kind of blend it in the high teens. But I think the targets we set for the 2 groups and the opportunities we see within the 2 segments are fairly, fairly similar. Paul Knight - Credit Agricole Securities (USA) Inc. Okay.

[Operator Instructions] We have a question from the line of Jon Wood from Jefferies & Company.

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

No, it does not.

I would say, I think we'll continue to look for bolt-on acquisitions. I think we've got a strong balance sheet and we can continue to do a couple of hundred million if we saw the appropriate targets. 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.

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.

We have a question from the line of Ross Muken from Deutsche Bank.

This is Vijay in for Ross. I just had one question. You sort of mentioned strength in 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 what you're seeing?

So I think this strength is really coming from 2 aspects. 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've introduced some new products recently that are getting very good traction in the market. So I think it's a combination of the strong market and the new products. And I suspect we're executing quite well.

We have a follow-up question from the line of Paul Knight from CLSA. Paul Knight - Credit Agricole Securities (USA) Inc. Andy, what was the top line guidance for Q2?

Mid-single digit. And that's also the guidance for the year. Paul Knight - Credit Agricole Securities (USA) Inc. And that would be total. What kind of range on absolute revenue level?

The absolute dollars? Paul Knight - Credit Agricole Securities (USA) Inc. Yes.

I don't have that off the top of my head. Dave, do you have it? Paul Knight - Credit Agricole Securities (USA) Inc. That's okay, thanks.

We have a question from the line -- actually, a follow-up question from Isaac Ro from Goldman Sachs.

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

Yes. The balance of the year, we think it’s going to be a tailwind 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 margin 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 the more significant operating improvement you guys have in the works?

Well, 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 and the balance of that being productivity improvement. So obviously, if we do better than that, hopefully we'll get there faster. But we may reinvest as you know. If we do worse, we'll probably have to do some more heavy lifting. But that's the mix right now.

And we have no further questions in the queue. I would like to turn the call over to Mr. Rob 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 decade-approach to improving our operating margins while investing in new technologies, 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're progressing against our priorities. Thank you for your participation today, 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.