Revvity, Inc.

Hello, everybody, and welcome to the Q2 2025 Revity Earnings Conference Call. My name is Elliot, and I'll be your coordinator for today. If you would like to register a question during today's event, please press star 1 on your telephone keypad. And I'd like to hand over to Steve Willoughby, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Revity's second quarter 2025 Earnings Conference Call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer, and Max Grykowiak, our Senior Vice President and Chief Financial Officer. I'd like to remind you of the Safe Harbor statements outlined in our press release issued earlier this morning and those in our SEC filings. Statements or comments made on this call may be forward-looking statements, which may include but may not be limited to financial projections or other statements of the company's plans, objectives, expectations, or intentions. The company's actual results may differ significantly from those projected or suggested due to a variety of factors which are discussed in detail in our SEC filings. Any forward-looking statements made today represent our views as of today. We disclaim any obligation to update these forward-looking statements in the future, even if our estimates change. So you should not rely on any of today's statements as representing our views as of any date after today. During the call, we will be referring to certain non-GAAP financial measures. A reconciliation of the 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. I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh.

Prahlad? Thanks, Steve, and good morning, everyone. The dynamic macro and market environment we experienced during the first quarter of the year continued through the second quarter and at this point does not yet appear to be settling down as we enter the second half of the year. Despite these persistent and in some cases new challenges, Revity continues to perform at a high level. This strong performance exemplifies our unique businesses, which provided us with the proper balance to continue to generate results that were in line to above our expectations. I'm very proud and extremely impressed with our employees' ability to stay focused on our key objectives, quickly adapt to evolving obstacles, and capitalize on new opportunities as they arise. This strong performance and flexibility was on display in many ways during the second quarter, such as our ability to maneuver rapidly in the varying tariff environment, our strong levels of innovation, and our ability to swiftly manage and adjust our cost structure to ensure we continue to deliver for our shareholders. All these efforts culminated in our robust cash flow generation, which we have actively redeployed to return cash to our shareholders. Despite the evolving market and regulatory environment, we were again able to achieve our objectives and deliver another solid quarter with 3% organic growth overall, which was right in line with our expectations. With a modestly stronger operating margin performance when excluding the impact from FX, we reported adjusted EPS in the quarter of $1.18, which was solidly above our expectations and guidance. Our performance in the quarter was led by our life sciences business, which grew 4% organically overall, led by approximately 30% growth in our signals software franchise. In addition to the strong performance in the quarter, our software business also set a new record for orders in a single quarter, which bodes well for its future performance. This strength in software helped drive mid single digit growth year over year with our pharma and biotech customers. and improvement from the low single digit growth we experienced in the first quarter. This improved rate of growth from pharma and biotech was partially offset by continued weakness from academic and government customers, where our revenue again declined in the low single digits year over year globally, similar to the performance we saw in the first quarter. Sales into academic and government customers in the Americas region also declined in the low single digits, similar to the first quarter performance. Our diagnostic segment grew 2% organically in line with our expectations as our immunodiagnostics franchise faced more difficult multi-year comparisons, limiting its growth to the low single digits this past quarter. Around midway through the quarter, we began to face a new challenge in this business in China relating to an expansion and acceleration of a hospital lab reimbursement change known as the Diagnosis Related Groups, or DRG. This expanded policy change is having an impact on the size of diagnostic panels ordered by physicians in the country, initially resulting in a reduction in overall volumes for some of our multiplex products. This is likely to drive an eventual increase in volume for more expensive single-plex tests, which we also offer. For the remainder of the year, we are now expecting a fairly meaningful pullback in our immunodiagnostics business in China, which is incorporated into our updated outlook for the total company for the year. While this policy change is a new headwind for us to contend, With over at least the remainder of the year, with the strong performance in many other areas of our business, along with tight management of our expenses, it is only having a very modest impact on our outlook for the year. We now expect our full-year organic growth to be in the 2% to 4% range, down 1% from our prior outlook, while our adjusted EPS for the year is now expected to be in the range of $4.85 to $4.95, which is also down a modest 1% compared to our previous expectation. Overall, the second quarter ended up playing out largely as we had expected, both from a top and bottom line perspective, despite the new unforeseen headwinds in our diagnostics business in China, which is a testament to our resilience and the differentiation our unique businesses provide. In addition to the solid P&L results, we also continued to perform well with our cash flow conversion and generation. In the quarter, we generated another $115 million of free cash flow, despite strategically moving and increasing inventories in some areas ahead of the potential tariff changes. This resulted in free cash flow conversion to our adjusted net income to continue to be in line with our longer-term aspirations and at 90% year-to-date. While we continue to actively evaluate redeploying this cash into potential M&A targets that we believe could make a strong strategic addition to the company, our disciplined multi-criteria process has not yet identified targets compelling enough from a financial profile and expected return perspective to move further forward with. Given the strong and differentiated financial profile Revity now has and our robust internal innovation pipelines, we will continue to remain active and aggressive in evaluating potential acquisition targets of all sizes, but will also remain disciplined as we believe Revity has been built into something that is truly special on its own. With our longer-term expectations for the company remaining unchanged, Despite the challenges our industry has faced over the last few years, we continue to be opportunistic and use this period to become increasingly aggressive with our share repurchase activities. After repurchasing $150 million worth of stock in the first quarter, we repurchased another nearly $300 million worth of stock in the second quarter alone. This brings our repurchases of stock through the first half of the year to just shy of $450 million. This equates to a reduction of over 4 million shares or nearly 4% of our total shares outstanding. Since the end of the second quarter last year, we have repurchased over $750 million of our stock, which has reduced our total average diluted shares outstanding by 7 million or an approximate 6% decline in our share count overall. Our solid operational performance is driven by our strong levels of innovation, which allow us to consistently introduce important new offering to our customers. One example of this from the second quarter was the launch of our new IBS I-20 analytical random access platform introduced through our EuroLeon business. which is part of our immunodiagnostics portfolio. This CE-MARC and FDA-listed device represents a breakthrough in specialty testing automation, allowing laboratories to consolidate up to 20 different analytes across six diagnostic specialties on a single instrument. The IDS i20 platform processes up to 140 tests per hour and enables labs to transition from manual or semi-automated methods to fully automated chemiluminescence immunoassay processing, while offering continuous loading capabilities and integrated reagent cooling, allowing for nonstop operation. We believe this solution addresses critical laboratory needs for efficiency, versatility, and reliability in specialty testing areas, including endocrinology, allergy, Alzheimer's disease, autoimmune, and infectious diseases, as well as therapeutic drug monitoring. The launch includes a strong initial lineup of assays with many more expected to be added over the remainder of the year and into 2026. Since launching in May, initial customer feedback from installations in key labs across Europe is quite promising. and we continue to believe the I-20 will be a significant part of our chemiluminescence growth strategy in the coming years. Our ongoing innovation and strong execution are not only robust, but also rooted in sustainability and integrity. Our continuous improvement in areas impacting our sustainability, governance, and social priorities was recognized recently by MSCI who increased their overall ESG rating for Revity to AAA, which is their highest level. I see this progress and action every day at the company, but I'm proud that our achievements are being recognized externally as well. As we look ahead to the second half of the year, a number of our businesses are positioned to continue to perform at a very high level, such as our Signals software franchise, and our reproductive health business, which is starting to benefit from the ramp up in July of sequencing volumes as part of the contract we were recently awarded from Genomics England for its generation study. It's also encouraging to see our life science reagents and instruments businesses demonstrating continued stability so far this year with a full year outlook for them remaining unchanged. We expect these promising signs to be partially offset by the new and unexpected challenges in our China immunodiagnostics business as previously mentioned. Overall, the current macroeconomic and regulatory environment continues to present challenges. But it's in precisely this kind of environment that we've consistently risen to the occasion and thrived. just as we have throughout the past five years of Revit's remarkable transformation. Our continued focus on executing at a high level on those items which are in our control, while capitalizing on opportunities and managing through hurdles as they arise, has allowed Revit to consistently outperform most of our peers over the last two and a half years, which is something I expect will continue in the years to come. This is all because of the dedication of our 11,000 colleagues around the world who are embracing the impossible to help improve lives everywhere. With that, I will now turn the call over to Matt.