Thermo Fisher Scientific Reports First Quarter 2017 Results

4/26/17

Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the first quarter ended April 1, 2017.

First Quarter 2017 Highlights

  • Reported revenue of $4.77 billion.
  • Reported GAAP diluted earnings per share (EPS) of $1.40.
    Reported adjusted EPS of $2.08.
  • Launched innovative new products across our technology portfolio, including the iCAP triple-quadrupole mass spectrometry system, the first cloud-connected electronic pipette and the microarray-based CarrierScan Assay for the detection of inherited diseases.
  • Achieved strong growth in Asia-Pacific markets, particularly China, India and South Korea. Opened new customer demonstration center for electron microscopy in partnership with Tsinghua University in Beijing to advance structural biology applications.
  • Completed two strategic bolt-on acquisitions – Finesse Solutions, which adds measurement and control capabilities to strengthen our bioproduction offering, and Core Informatics, provider of a leading cloud-based platform that enhances our digital science strategy.
  • Repurchased $500 million of stock during the quarter.

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 start the year on a strong note," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "We delivered excellent performance on both the top and bottom line, executing our growth strategy and positioning Thermo Fisher for an even stronger future.

"We started strong on the innovation front as well, launching new products that help our customers in a range of applications create more powerful workflows, drive efficiency and sustainability in their labs, and more effectively diagnose disease. In Asia-Pacific, we were especially pleased to continue our excellent momentum in China by leveraging our scale to strengthen our leadership in this key high-growth region.

"We also continued to effectively deploy our capital, making two complementary bolt-on acquisitions that offer exciting new growth opportunities, and returning capital to our shareholders through stock buybacks and dividends.

Casper added, "Based on our performance in the first quarter, we're well-positioned to deliver another excellent year."

First Quarter 2017

Revenue for the quarter grew 11% to $4.77 billion in 2017, versus $4.29 billion in the first quarter of 2016. Organic revenue growth was 4%; acquisitions increased revenue by 8% and currency translation reduced revenue by 1%.

GAAP Earnings Results

GAAP diluted EPS in the first quarter increased 39% to $1.40, versus $1.01 in the same quarter last year, in part reflecting a one-time tax benefit. GAAP operating income for the first quarter of 2017 grew to $622 million, compared with $518 million in the first quarter of 2016. GAAP operating margin increased to 13.1%, compared with 12.1% in the first quarter last year.

Non-GAAP Earnings Results

Adjusted EPS in the first quarter of 2017 rose 16% to $2.08, versus $1.80 in the year-ago quarter. Adjusted operating income for the first quarter of 2017 also grew 16% compared with the same quarter last year. Adjusted operating margin expanded 90 basis points to 22.6%, compared with 21.7% in the first quarter of 2016.

2017 Guidance Update

Thermo Fisher is raising its revenue and adjusted EPS guidance for 2017 to reflect strong first quarter performance, a less adverse foreign exchange environment and acquisitions completed in 2017. The company is raising revenue guidance to a new range of $19.51 to $19.71 billion versus its original guidance of $19.38 to $19.62 billion announced in January 2017. This would result in 7 to 8% revenue growth over the previous year. The company is raising its adjusted EPS guidance to a new range of $9.12 to $9.28 versus the $9.06 to $9.24 previously communicated, for 10 to 12% growth over 2016.

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company's four business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

Life Sciences Solutions Segment

In the first quarter of 2017, Life Sciences Solutions Segment revenue grew 12% to $1.36 billion, compared with revenue of $1.22 billion in the first quarter of 2016. Segment adjusted operating margin increased to 31.8%, versus 28.9% in the 2016 quarter.

Analytical Instruments Segment

Analytical Instruments Segment results reflect the acquisition of FEI Company in September 2016. Revenue for the segment grew 39% to $1.05 billion in the first quarter of 2017, compared with revenue of $759 million in the first quarter of 2016. Segment adjusted operating margin increased to 18.2%, versus 14.7% in the 2016 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue grew 1% to $866 million in the first quarter of 2017, compared with revenue of $855 million in the first quarter of 2016. Segment adjusted operating margin increased to 27.0%, versus 26.9% in the 2016 quarter.

Laboratory Products and Services Segment

In the first quarter of 2017, Laboratory Products and Services Segment revenue grew 3% to $1.70 billion, compared with revenue of $1.65 billion in the first quarter of 2016. Segment adjusted operating margin was 12.7%, versus 14.4% in the 2016 quarter.

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science, with revenues of $18 billion and more than 55,000 employees globally. Our mission is to enable our customers to make the world healthier, cleaner and safer. We help our customers accelerate life sciences research, solve complex analytical challenges, improve patient diagnostics and increase laboratory productivity. Through our premier brands – Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific and Unity Lab Services – we offer an unmatched combination of innovative technologies, purchasing convenience and comprehensive support. For more information, please visit www.thermofisher.com.