Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in
serving science, today reported its financial results for the first
quarter ended March 30, 2024.
First Quarter 2024 Highlights
- First quarter revenue was $10.34 billion.
- First quarter GAAP diluted earnings per share (EPS) increased
4% to $3.46.
- First quarter adjusted EPS increased 2% to $5.11.
- Advanced our proven growth strategy, launching a range of
high-impact, innovative new products during the quarter. This
included several analytical instruments: the Thermo Scientific™
Dionex™ Inuvion™ Ion Chromatography system, offering higher
resolution, faster results, and streamlined workflows for
identifying contaminants in water; the Thermo Scientific™
LInspector™ Edge In-line Mass Profilometer to enhance battery
safety, performance and production; and the Thermo Scientific™
TruScan™ G3 Handheld Raman Analyzer, a next-generation handheld
device for the rapid identification of chemical compounds used in
drug production. We also launched the new Axiom™ PangenomiX Array,
a high-throughput array for use in human genomic studies across
global populations, including disease risk and detection research
as well as population-scale disease research programs.
- Continued to strengthen our industry-leading commercial engine
and deepen our trusted partner status with customers to accelerate
innovation and enhance productivity with the ultimate goal of
improving patient care. Examples during the quarter included the
launch of the CorEvitas syndicated clinical registry in generalized
pustular psoriasis to address an unmet need for real-world evidence
related to outcomes for patients with this rare disease, and the
expansion of our portfolio of services at our GMP lab in Middleton,
Wisconsin to include qPCR-based biosafety testing capabilities to
enable significantly faster results versus traditional testing
methods. We also continued to collaborate with customers to improve
health outcomes, developing next-generation sequencing-based
companion diagnostics to help identify patients for precision
cancer therapies.
- Active quarter of capital deployment, repurchasing $3.0 billion
of stock and increasing our dividend by 11 percent.
“We are very pleased to deliver another quarter of strong
financial results,” said Marc N. Casper, chairman, president and
chief executive officer of Thermo Fisher Scientific. “We had a
great start to the year, driven by our proven growth strategy and
the impact of our PPI Business System.”
Casper added, “Our team continues to enable the success of our
customers while demonstrating incredibly strong commercial
execution and operational discipline. This positions us to deliver
differentiated performance in 2024, as we continue to create value
for all of our stakeholders and build an even brighter future for
our company.”
First Quarter 2024
Revenue for the quarter declined 3% to $10.34 billion in 2024,
versus $10.71 billion in 2023. Organic revenue was 4% lower and
Core organic revenue growth declined 3%.
GAAP Earnings Results
GAAP diluted EPS in the first quarter of 2024 increased 4% to
$3.46, versus $3.32 in the same quarter last year. GAAP operating
income for the first quarter of 2024 grew to $1.66 billion,
compared with $1.56 billion in the year-ago quarter. GAAP operating
margin increased to 16.1%, compared with 14.6% in the first quarter
of 2023.
Non-GAAP Earnings Results
Adjusted EPS in the first quarter of 2024 increased 2% to $5.11,
versus $5.03 in the first quarter of 2023. Adjusted operating
income for the first quarter of 2024 was $2.28 billion, compared
with $2.33 billion in the year-ago quarter. Adjusted operating
margin increased to 22.0%, compared with 21.8% in the first quarter
of 2023.
Annual Guidance for 2024
Thermo Fisher is raising its full year revenue and adjusted EPS
guidance to reflect stronger operational performance. The company
is raising its revenue guidance to a new range of $42.3 to $43.3
billion versus its previous guidance of $42.1 to $43.3 billion. The
company is raising its adjusted EPS guidance to a new range of
$21.14 to $22.02 versus its previous guidance of $20.95 to
$22.00.
Use of Non-GAAP Financial Measures
Adjusted EPS, adjusted net income, adjusted operating income,
adjusted operating margin, free cash flow, organic revenue growth
and Core organic revenue growth are non-GAAP measures that exclude
certain items detailed after the tables that accompany this press
release, under the heading “Supplemental Information Regarding
Non-GAAP Financial Measures.” The reconciliations of GAAP to
non-GAAP financial measures are provided in the tables that
accompany this press release.
Note on Presentation
Certain amounts and percentages reported within this press
release are presented and calculated based on underlying unrounded
amounts. As a result, the sum of components may not equal
corresponding totals due to rounding.
Conference Call
Thermo Fisher Scientific will hold its earnings conference call
today, April 24, at 8:30 a.m. Eastern Daylight Time. During the
call, the company will discuss its financial performance, as well
as future expectations. To listen, call (833) 470-1428 within the
U.S. or (404) 975-4839 outside the U.S. The access code is 105588.
You may also listen to the call live on the “Investors” section of
our website, www.thermofisher.com. The earnings press release and
related information can also be found in that section of our
website under the heading “Financials”. A replay of the call will
be available under “News, Events & Presentations” through
Wednesday, May 8, 2024.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. is the world leader in serving
science, with annual revenue over $40 billion. Our Mission is to
enable our customers to make the world healthier, cleaner and
safer. Whether our customers are accelerating life sciences
research, solving complex analytical challenges, increasing
productivity in their laboratories, improving patient health
through diagnostics or the development and manufacture of
life-changing therapies, we are here to support them. Our global
team delivers an unrivaled combination of innovative technologies,
purchasing convenience and pharmaceutical services through our
industry-leading brands, including Thermo Scientific, Applied
Biosystems, Invitrogen, Fisher Scientific, Unity Lab Services,
Patheon and PPD. For more information, please visit
www.thermofisher.com.
Safe Harbor Statement
The following constitutes a “Safe Harbor” statement under the
Private Securities Litigation Reform Act of 1995: This press
release contains forward-looking statements that involve a number
of risks and uncertainties. Important factors that could cause
actual results to differ materially from those indicated by
forward-looking statements include risks and uncertainties relating
to: the COVID-19 pandemic; the need to develop new products and
adapt to significant technological change; implementation of
strategies for improving growth; general economic conditions and
related uncertainties; dependence on customers' capital spending
policies and government funding policies; the effect of economic
and political conditions and exchange rate fluctuations on
international operations; use and protection of intellectual
property; the effect of changes in governmental regulations; any
natural disaster, public health crisis or other catastrophic event;
and the effect of laws and regulations governing government
contracts, as well as the possibility that expected benefits
related to recent or pending acquisitions, including our pending
acquisition of Olink, may not materialize as expected. Additional
important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements
are set forth in our most recent annual report on Form 10-K, which
is on file with the SEC and available in the “Investors” section of
our website under the heading “SEC Filings.” While we may elect to
update forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so, even if estimates
change and, therefore, you should not rely on these forward-looking
statements as representing our views as of any date subsequent to
today.
Additional Information and Where to Find It
This communication is for informational purposes only and is
neither an offer to purchase nor a solicitation of an offer to sell
any common shares or American Depositary Shares of Olink or any
other securities, nor is it a substitute for the tender offer
materials that Thermo Fisher or Orion Acquisition AB (the “Buyer”)
has filed with the SEC. The terms and conditions of the tender
offer are published in, and the offer to purchase common shares and
American Depositary Shares of Olink is made only pursuant to, the
offer document and related offer materials prepared by Thermo
Fisher and the Buyer and is filed with the SEC in a tender offer
statement on Schedule TO. In addition, Olink has filed a
solicitation/recommendation statement on Schedule 14D-9 with the
SEC with respect to the tender offer.
THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, AN
ADS LETTER OF TRANSMITTAL, ACCEPTANCE FORM FOR SHARES AND CERTAIN
OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9, AS THEY MAY BE AMENDED FROM TIME TO
TIME, CONTAIN IMPORTANT INFORMATION. INVESTORS AND SHAREHOLDERS OF
OLINK ARE URGED TO READ THESE DOCUMENTS CAREFULLY BECAUSE THEY, AND
NOT THIS DOCUMENT, GOVERN THE TERMS AND CONDITIONS OF THE TENDER
OFFER, AND BECAUSE THEY CONTAIN IMPORTANT INFORMATION THAT SUCH
PERSONS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING
TENDERING THEIR COMMON SHARES AND AMERICAN DEPOSITARY SHARES.
The tender offer materials, including the offer to purchase, the
related ADS letter of transmittal and acceptance form for shares
and certain other tender offer documents, and the
solicitation/recommendation statement and other documents filed
with the SEC by Thermo Fisher or Olink, may be obtained free of
charge at the SEC's website at www.sec.gov, at Olink’s website
https://investors.olink.com/investor-relations, at Thermo Fisher's
website at www.thermofisher.com or by contacting Thermo Fisher's
investor relations department at 781-622-1111.
Condensed Consolidated Statements of Income (unaudited)
Three months ended
March 30,
% of
April 1,
% of
(Dollars in millions except per share
amounts)
2024
Revenues
2023
Revenues
Revenues
$
10,345
$
10,710
Costs and operating expenses:
Cost of revenues (a)
6,040
58.4
%
6,437
60.1
%
Selling, general and administrative
expenses (b)
1,731
16.7
%
1,646
15.4
%
Amortization of acquisition-related
intangible assets
551
5.3
%
606
5.7
%
Research and development expenses
331
3.2
%
346
3.2
%
Restructuring and other costs (c)
29
0.3
%
112
1.0
%
Total costs and operating expenses
8,682
83.9
%
9,147
85.4
%
Operating income
1,663
16.1
%
1,563
14.6
%
Interest income
279
146
Interest expense
(363
)
(300
)
Other income/(expense) (d)
10
(46
)
Income before income taxes
1,589
1,363
Provision for income taxes (e)
(281
)
(46
)
Equity in earnings/(losses) of
unconsolidated entities
23
(25
)
Net income
1,331
1,292
Less: net income/(losses) attributable to
noncontrolling interests and redeemable noncontrolling interest
4
3
Net income attributable to Thermo Fisher
Scientific Inc.
$
1,328
12.8
%
$
1,289
12.0
%
Earnings per share attributable to Thermo
Fisher Scientific Inc.:
Basic
$
3.47
$
3.34
Diluted
$
3.46
$
3.32
Weighted average shares:
Basic
382
386
Diluted
384
388
Reconciliation of adjusted operating
income and adjusted operating margin
GAAP operating income
$
1,663
16.1
%
$
1,563
14.6
%
Cost of revenues adjustments (a)
15
0.1
%
41
0.4
%
Selling, general and administrative
expenses adjustments (b)
19
0.2
%
8
0.1
%
Restructuring and other costs (c)
29
0.3
%
112
1.0
%
Amortization of acquisition-related
intangible assets
551
5.3
%
606
5.7
%
Adjusted operating income (non-GAAP
measure)
$
2,278
22.0
%
$
2,330
21.8
%
Reconciliation of adjusted net
income
GAAP net income attributable to Thermo
Fisher Scientific Inc.
$
1,328
$
1,289
Cost of revenues adjustments (a)
15
41
Selling, general and administrative
expenses adjustments (b)
19
8
Restructuring and other costs (c)
29
112
Amortization of acquisition-related
intangible assets
551
606
Other income/expense adjustments (d)
(11
)
46
Provision for income taxes adjustments
(e)
50
(171
)
Equity in earnings/losses of
unconsolidated entities
(23
)
25
Adjusted net income (non-GAAP measure)
$
1,959
$
1,956
Reconciliation of adjusted earnings per
share
GAAP diluted EPS attributable to Thermo
Fisher Scientific Inc.
$
3.46
$
3.32
Cost of revenues adjustments (a)
0.04
0.10
Selling, general and administrative
expenses adjustments (b)
0.05
0.02
Restructuring and other costs (c)
0.08
0.29
Amortization of acquisition-related
intangible assets
1.44
1.56
Other income/expense adjustments (d)
(0.03
)
0.12
Provision for income taxes adjustments
(e)
0.13
(0.44
)
Equity in earnings/losses of
unconsolidated entities
(0.06
)
0.06
Adjusted EPS (non-GAAP measure)
$
5.11
$
5.03
Reconciliation of free cash
flow
GAAP net cash provided by operating
activities
$
1,251
$
729
Purchases of property, plant and
equipment
(347
)
(458
)
Proceeds from sale of property, plant and
equipment
4
6
Free cash flow (non-GAAP measure)
$
908
$
277
Business Segment Information
Three months ended
March 30,
% of
April 1,
% of
(Dollars in millions)
2024
Revenues
2023
Revenues
Revenues
Life Sciences Solutions
$
2,285
22.1
%
$
2,612
24.4
%
Analytical Instruments
1,687
16.3
%
1,723
16.1
%
Specialty Diagnostics
1,109
10.7
%
1,108
10.3
%
Laboratory Products and Biopharma
Services
5,723
55.3
%
5,763
53.8
%
Eliminations
(460
)
-4.4
%
(496
)
-4.6
%
Consolidated revenues
$
10,345
100.0
%
$
10,710
100.0
%
Segment income and segment income
margin
Life Sciences Solutions
$
840
36.8
%
$
836
32.0
%
Analytical Instruments
400
23.7
%
421
24.4
%
Specialty Diagnostics
294
26.5
%
280
25.3
%
Laboratory Products and Biopharma
Services
744
13.0
%
793
13.8
%
Subtotal reportable segments
2,278
22.0
%
2,330
21.8
%
Cost of revenues adjustments (a)
(15
)
-0.1
%
(41
)
-0.4
%
Selling, general and administrative
expenses adjustments (b)
(19
)
-0.2
%
(8
)
-0.1
%
Restructuring and other costs (c)
(29
)
-0.3
%
(112
)
-1.0
%
Amortization of acquisition-related
intangible assets
(551
)
-5.3
%
(606
)
-5.7
%
Consolidated GAAP operating income
$
1,663
16.1
%
$
1,563
14.6
%
(a) Adjusted results in 2024 and 2023
exclude charges for inventory write-downs associated with
large-scale abandonment of product lines. Adjusted results in 2023
exclude $10 of charges for the sale of inventory revalued at the
date of acquisition.
(b) Adjusted results in 2024 and 2023
exclude certain third-party expenses, principally
transaction/integration costs related to recent acquisitions, and
charges/credits for changes in estimates of contingent acquisition
consideration.
(c) Adjusted results in 2024 and 2023
exclude restructuring and other costs consisting principally of
severance, impairments of long-lived assets, abandoned facility,
and other expenses of headcount reductions and real estate
consolidations. Adjusted results in 2023 also exclude $18 of net
charges for pre-acquisition litigation and other matters.
(d) Adjusted results in 2024 and 2023
exclude net gains/losses on investments.
(e) Adjusted results in 2024 and 2023
exclude incremental tax impacts for the reconciling items between
GAAP and adjusted net income, incremental tax impacts as a result
of tax rate/law changes, and the tax impacts from audit
settlements.
Note:
Consolidated depreciation expense is $285
and $253 in 2024 and 2023, respectively.
Organic and Core organic revenue
growth
Three months ended
March 30, 2024
Revenue growth
-3%
Acquisitions
0%
Currency translation
0%
Organic revenue growth (non-GAAP
measure)
-4%
COVID-19 testing revenue
-1%
Core organic revenue growth (non-GAAP
measure)
-3%
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Condensed Consolidated Balance Sheets
(unaudited)
March 30,
December 31,
(In millions)
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
5,499
$
8,077
Short-term investments
1,751
3
Accounts receivable, net
7,931
8,221
Inventories
5,133
5,088
Other current assets
3,326
3,200
Total current assets
23,640
24,589
Property, plant and equipment, net
9,324
9,448
Acquisition-related intangible assets,
net
16,048
16,670
Other assets
4,241
3,999
Goodwill
43,843
44,020
Total assets
$
97,095
$
98,726
Liabilities, redeemable noncontrolling
interest and equity
Current liabilities:
Short-term obligations and current
maturities of long-term obligations
$
4,451
$
3,609
Other current liabilities
9,486
10,403
Total current liabilities
13,937
14,012
Other long-term liabilities
6,378
6,564
Long-term obligations
31,157
31,308
Redeemable noncontrolling interest
119
118
Total equity
45,504
46,724
Total liabilities, redeemable
noncontrolling interest and equity
$
97,095
$
98,726
Condensed Consolidated Statements of
Cash Flows (unaudited)
Three months ended
March 30,
April 1,
(In millions)
2024
2023
Operating activities
Net income
$
1,331
$
1,292
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
837
859
Change in deferred income taxes
(253
)
(146
)
Other non-cash expenses, net
123
257
Changes in assets and liabilities,
excluding the effects of acquisitions
(787
)
(1,533
)
Net cash provided by operating
activities
1,251
729
Investing activities
Purchases of property, plant and
equipment
(347
)
(458
)
Proceeds from sale of property, plant and
equipment
4
6
Proceeds from cross-currency interest rate
swap interest settlements
64
2
Acquisitions, net of cash acquired
—
(2,704
)
Purchases of investments
(1,758
)
(2
)
Other investing activities, net
7
14
Net cash used in investing activities
(2,030
)
(3,142
)
Financing activities
Net proceeds from issuance of debt
1,205
—
Net proceeds from issuance of commercial
paper
—
1,027
Repayment of commercial paper
—
(523
)
Purchases of company common stock
(3,000
)
(3,000
)
Dividends paid
(135
)
(117
)
Other financing activities, net
110
20
Net cash used in financing activities
(1,821
)
(2,593
)
Exchange rate effect on cash
22
(31
)
Decrease in cash, cash equivalents and
restricted cash
(2,578
)
(5,037
)
Cash, cash equivalents and restricted cash
at beginning of period
8,097
8,537
Cash, cash equivalents and restricted cash
at end of period
$
5,519
$
3,500
Free cash flow (non-GAAP measure)
$
908
$
277
Note:
For more information related to non-GAAP
financial measures, refer to the section titled “Supplemental
Information Regarding Non-GAAP Financial Measures” of this
release.
Supplemental Information Regarding Non-GAAP Financial
Measures
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), we use
certain non-GAAP financial measures such as organic revenue growth,
which is reported revenue growth, excluding the impacts of
acquisitions/divestitures and the effects of currency translation.
We also report Core organic revenue growth, which is reported
revenue growth, excluding the impacts of COVID-19 testing revenue,
and excluding the impacts of acquisitions/divestitures and the
effects of currency translation. We report these measures because
Thermo Fisher management believes that in order to understand the
company’s short-term and long-term financial trends, investors may
wish to consider the impact of acquisitions/divestitures, foreign
currency translation and/or COVID-19 testing on revenues. Thermo
Fisher management uses these measures to forecast and evaluate the
operational performance of the company as well as to compare
revenues of current periods to prior periods.
We report adjusted operating income, adjusted operating margin,
adjusted net income, and adjusted EPS. We believe that the use of
these non-GAAP financial measures, in addition to GAAP financial
measures, helps investors to gain a better understanding of our
core operating results and future prospects, consistent with how
management measures and forecasts the company’s core operating
performance, especially when comparing such results to previous
periods, forecasts, and to the performance of our competitors. Such
measures are also used by management in their financial and
operating decision-making and for compensation purposes. To
calculate these measures we exclude, as applicable:
- Certain acquisition-related costs, including charges for the
sale of inventories revalued at the date of acquisition,
significant transaction/acquisition-related costs, including
changes in estimates of contingent acquisition-related
consideration, and other costs associated with obtaining short-term
financing commitments for pending/recent acquisitions. We exclude
these costs because we do not believe they are indicative of our
normal operating costs.
- Costs/income associated with restructuring activities and
large-scale abandonments of product lines, such as reducing
overhead and consolidating facilities. We exclude these costs
because we believe that the costs related to restructuring
activities are not indicative of our normal operating costs.
- Equity in earnings/losses of unconsolidated entities;
impairments of long-lived assets; and certain other gains and
losses that are either isolated or cannot be expected to occur
again with any predictability, including gains/losses on
investments, the sale of businesses, product lines, and real
estate, significant litigation-related matters,
curtailments/settlements of pension plans, and the early retirement
of debt. We exclude these items because they are outside of our
normal operations and/or, in certain cases, are difficult to
forecast accurately for future periods.
- The expense associated with the amortization of
acquisition-related intangible assets because a significant portion
of the purchase price for acquisitions may be allocated to
intangible assets that have lives of up to 20 years. Exclusion of
the amortization expense allows comparisons of operating results
that are consistent over time for both our newly acquired and
long-held businesses and with both acquisitive and non-acquisitive
peer companies.
- The noncontrolling interest and tax impacts of the above items
and the impact of significant tax audits or events (such as changes
in deferred taxes from enacted tax rate/law changes), the latter of
which we exclude because they are outside of our normal operations
and difficult to forecast accurately for future periods.
We report free cash flow, which is operating cash flow excluding
net capital expenditures, to provide a view of the continuing
operations’ ability to generate cash for use in acquisitions and
other investing and financing activities. The company also uses
this measure as an indication of the strength of the company. Free
cash flow is not a measure of cash available for discretionary
expenditures since we have certain non-discretionary obligations
such as debt service that are not deducted from the measure.
Thermo Fisher Scientific does not provide GAAP financial
measures on a forward-looking basis because we are unable to
predict with reasonable certainty and without unreasonable effort
items such as the timing and amount of future restructuring actions
and acquisition-related charges as well as gains or losses from
sales of real estate and businesses, the early retirement of debt
and the outcome of legal proceedings. The timing and amount of
these items are uncertain and could be material to Thermo Fisher
Scientific’s results computed in accordance with GAAP.
The non-GAAP financial measures of Thermo Fisher Scientific’s
results of operations and cash flows included in this press release
are not meant to be considered superior to or a substitute for
Thermo Fisher Scientific’s results of operations prepared in
accordance with GAAP. Reconciliations of such non-GAAP financial
measures to the most directly comparable GAAP financial measures
are set forth in the tables above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240423741228/en/
Media Contact Information: Sandy Pound Thermo Fisher Scientific
Phone: 781-622-1223 E-mail: sandy.pound@thermofisher.com
Investor Contact Information: Rafael Tejada Thermo Fisher
Scientific Phone: 781-622-1356 E-mail:
rafael.tejada@thermofisher.com
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