Thermo Fisher revenue up 33%

Thermo Fisher revenue up 33%

Testing company reports a stellar Q2 after acquiring Life Technologies.

Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, reported its financial results for the second quarter ended June 28, 2014, the first full quarter including the Life Technologies acquisition and excluding the related divestitures.

Second quarter highlights:

  • Grew adjusted earnings per share (EPS) by 30 percent to $1.72
  • Increased revenue by 33 percent to $4.32 billion
  • Expanded adjusted operating margin by 210 basis points to 21.4 percent
  • Generated free cash flow of $823 million
  • Launched new Thermo Scientific consumables, instruments and software at the American Society of Mass Spectrometry conference to strengthen industry leadership, highlighted by the new Q Exactive HF system and the new TSQ 8000 Evo triple quad.
  • Expanded capabilities at Centers of Excellence in Lithuania and Germany to support growth of molecular biology products for life sciences and diagnostics, and to meet demand for mass spectrometry systems used in research and applied markets.

Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”

“We’re pleased to deliver a great second quarter, with strong top-line performance contributing to outstanding growth on the bottom line,” said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. “In the quarter, our teams executed very well, we made good progress on the Life Technologies integration—with synergies tracking ahead of plan—and we continued to invest in new technologies and capabilities to strengthen our global strategic position.”

“Among the highlights, we had another strong showing at ASMS, building on our highly successful Q Exactive and TSQ 8000 triple quad platforms to deliver new levels of analytical sensitivity and speed. To support our core technology offerings, we’re significantly expanding our key sites in Vilnius and Bremen, adding manufacturing capacity to meet customer demand and drive growth.

“To sum it up, we’re successfully executing our growth strategy, the Life Technologies integration is going well and we’re on track to deliver a strong 2014.”

Second quarter 2014
For the second quarter of 2014, adjusted EPS grew 30 percent to $1.72, versus $1.32 in the second quarter of 2013. Revenue for the quarter grew 33 percent to $4.32 billion in 2014, versus $3.24 billion in 2013. Organic revenue grew 5 percent, with currency translation increasing revenue by 1 percent and acquisitions, net of divestitures, increasing revenue by 27 percent. Adjusted operating income for the second quarter of 2014 increased 48 percent compared with the year-ago period, and adjusted operating margin expanded to 21.4 percent, compared with 19.3 percent in the second quarter of 2013.

GAAP diluted EPS for the second quarter of 2014 was $0.69 versus $0.76 in the same quarter last year due to higher acquisition-related charges in 2014. GAAP operating income for the second quarter of 2014 was $348 million, compared with $375 million in 2013. GAAP operating margin decreased to 8.1 percent, compared with 11.6 percent in the second quarter of 2013.

Annual guidance for 2014
Thermo Fisher is updating its annual revenue and adjusted EPS guidance for full-year 2014 primarily to reflect solid operating performance in the first half of the year, increased synergies from the Life Technologies integration and the expected divestiture of its Cole-Parmer business.

The company now expects revenue for 2014 to be in the range of $16.86 to $16.98 billion versus its previous guidance of $16.84 to $17.00 billion, with year-over-year revenue growth remaining at 29 percent to 30 percent. Thermo Fisher is raising adjusted EPS guidance to a new range of $6.85 to $6.97 from the $6.80 to $6.95 previously announced, which now results in 26 percent to 29 percent adjusted EPS growth over 2013.

The 2014 guidance does not include any future acquisitions or divestitures, other than the previously announced sale of Cole-Parmer, and is based on current foreign exchange rates. In addition, the adjusted EPS estimate excludes amortization expense for acquisition-related intangible assets and certain other items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”

Segment results
Management uses adjusted operating results to monitor and evaluate performance of the company’s four business segments, as highlighted below.

Life Sciences Solutions Segment
In the second quarter of 2014, Life Sciences Solutions Segment revenue was $1.10 billion, compared with revenue of $181 million in the second quarter of 2013, reflecting the inclusion of the Life Technologies acquisition for the full quarter. Segment adjusted operating income in the 2014 quarter was $299 million versus $44 million in the year-ago quarter, and adjusted operating margin was 27.1 percent, versus 24.0 percent in 2013.

Analytical Instruments Segment
Analytical Instruments Segment revenue increased 4 percent to $793 million in the second quarter of 2014, compared with revenue of $761 million in the second quarter of 2013. Segment adjusted operating income increased 4 percent in the second quarter of 2014, and adjusted operating margin was 16.4 percent, versus 16.5 percent in the 2013 quarter.

Specialty Diagnostics Segment
Specialty Diagnostics Segment revenue in the second quarter increased 8 percent to $855 million in 2014, compared with revenue of $794 million in the second quarter of 2013. Segment adjusted operating income rose 9 percent in the second quarter of 2014, and adjusted operating margin increased to 27.6 percent, versus 27.3 percent in the 2013 quarter.

Laboratory Products and Services Segment
In the second quarter of 2014, Laboratory Products and Services Segment revenue increased 7 percent to $1.70 billion, compared with revenue of $1.60 billion in the second quarter of 2013. Segment adjusted operating income grew 8 percent in the second quarter of 2014, and adjusted operating margin increased to 15.2 percent, versus 15.0 percent in the 2013 quarter.

 

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