| | FOR IMMEDIATE RELEASE | |
| | Media Contact Information: Karen Kirkwood | Investor Contact Information: Ken Apicerno |
| | Phone: 781-622-1306 | Phone: 781-622-1294 |
| | E-mail: karen.kirkwood@thermofisher.com | E-mail: ken.apicerno@thermofisher.com |
| | Website: www.thermofisher.com | |
Thermo Fisher Scientific Reports First Quarter 2013 Results
WALTHAM, Mass. (April 24, 2013) – Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the first quarter ended March 30, 2013.
First Quarter 2013 Highlights
| · | Adjusted earnings per share (EPS) grew 17% to a record $1.37 |
| · | Revenue increased 4% to a first quarter record of $3.19 billion |
| · | Adjusted operating margin expanded 40 basis points to 19.3% |
| · | Launched innovative new products at Pittcon that strengthened analytical technologies offering, including major upgrade of gold-standard Chromeleon chromatography data system |
| · | Deployed $90 million in the quarter to repurchase 1.3 million shares |
| · | After quarter-end, announced agreement to acquire Life Technologies, creating an unrivaled industry leader serving research, specialty diagnostics 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 with our solid first quarter results, with good performance on the top line,” said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. “We also extended our track record of strong adjusted EPS growth, delivering a 17% increase year over year. Although the macro environment played out at the lower end of our expectations, our teams executed well to continue our growth momentum into 2013.
“It was a great quarter for product innovation, with a strong showing at Pittcon that reinforced our leadership in analytical technologies. Among the highlights, we introduced the next generation of our premier chromatography software, Chromeleon 7.2. This upgrade allows mass spectrometry and chromatography systems to be controlled on one data platform for the first time and facilitates the flow of information, for example, between research labs. For applied markets, we launched the iCAP 7000 elemental analyzer and the picoSpin 45 miniature NMR spectrometer, both of which extend the use of research-grade technologies to a broader customer base.
“From a geographic perspective, our industry-leading scale in Asia-Pacific continues to drive growth. This is particularly evident in China, where our depth of capabilities is helping our customers there improve healthcare, the environment and food safety.
“Finally, the recent announcement of our agreement to acquire Life Technologies will take our leadership position to a new level, creating an unrivaled leader in our industry. We look forward to closing the transaction and executing a successful integration to create significant value for our customers and shareholders alike.”
First Quarter 2013
For the first quarter of 2013, adjusted EPS grew 17% to a record $1.37, versus $1.17 in the first quarter of 2012. Revenue for the quarter grew 4% to $3.19 billion in 2013, versus $3.06 billion in 2012. Organic revenue grew 3%, with currency translation lowering revenue by 1% and acquisitions increasing revenue by 3%. Adjusted operating income for the first quarter of 2013 increased 7% compared with the year-ago period, and adjusted operating margin expanded to 19.3%, compared with 18.9% in the first quarter of 2012.
GAAP diluted EPS for the first quarter of 2013 was $0.93, versus $0.75 in the same quarter last year. GAAP operating income for the first quarter of 2013 increased 7% to $387 million, compared with $362 million in 2012. GAAP operating margin increased to 12.1%, compared with 11.8% in the first quarter of 2012.
Annual Guidance for 2013
Casper added, “We’re updating our 2013 guidance based on our solid first quarter performance and our decision to suspend share buybacks in light of our pending acquisition of Life Technologies.”
The company is updating its revenue guidance range from $12.80 to $13.00 billion to a new range of $12.84 to $13.00 billion, resulting in 3% to 4% growth year over year. It is also updating full year 2013 adjusted EPS guidance from $5.32 to $5.46 to a new range of $5.27 to $5.39, reflecting the suspension of share buybacks and tightening of its revenue range. This would lead to 7% to 9% growth over 2012.
The 2013 guidance does not include the acquisition of Life Technologies or the impact of related financing activities. As previously stated, the guidance does not include any other future acquisitions or divestitures, 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 three business segments, as highlighted below.
Analytical Technologies Segment
In the first quarter of 2013, Analytical Technologies Segment revenue was $978 million, compared with revenue of $980 million in the first quarter of 2012. Segment adjusted operating income decreased 2% in the first quarter of 2013, and adjusted operating margin was 18.0%, versus 18.2% in the 2012 quarter.
Specialty Diagnostics Segment
Specialty Diagnostics Segment revenue in the first quarter increased 10% to $806 million in 2013, compared with revenue of $732 million in the first quarter of 2012. Segment adjusted operating income increased 19% in the first quarter of 2013, and adjusted operating margin increased to 27.5%, versus 25.5% in the 2012 quarter.
Laboratory Products and Services Segment
In the first quarter of 2013, Laboratory Products and Services Segment revenue increased 5% to $1.54 billion, compared with revenue of $1.48 billion in the first quarter of 2012. Segment adjusted operating income increased 3% in the first quarter of 2013, and adjusted operating margin was 14.1%, versus 14.3% in the 2012 quarter.
Use of 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, including adjusted EPS, adjusted operating income and adjusted operating margin, which exclude restructuring and other costs/income and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses, tax provisions/benefits related to the previous items, benefits from tax credit carryforwards, the impact of significant tax audits or events and discontinued operations. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. We also use a non-GAAP measure, free cash flow, which excludes operating cash flows from discontinued operations and deducts net capital expenditures. We believe that the use of non-GAAP 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 performance, especially when comparing such results to previous periods or forecasts.
For example:
We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.
We exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs. We exclude these costs because we do not believe they are indicative of our normal operating costs.
We exclude the expense and tax effects 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 5 to 20 years. Our adjusted EPS estimate for 2013 excludes approximately $1.50 of expense for the amortization of acquisition-related intangible assets for acquisitions completed through the end of the first quarter of 2013. 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.
We also exclude certain gains/losses and related tax effects, benefits from tax credit carryforwards and the impact of significant tax audits or events (such as the one-time effect on deferred tax balances of enacted changes in tax rates), which are either isolated or cannot be expected to occur again with any regularity or predictability and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business or real estate, gains or losses on significant litigation-related matters, gains on curtailments of pension plans, the early retirement of debt and discontinued operations.
We also report free cash flow, which is operating cash flow, net of capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities.
Thermo Fisher’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the company’s core operating performance and comparing such performance to that of prior periods 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.
The non-GAAP financial measures of Thermo Fisher’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’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 accompanying tables. Thermo Fisher’s earnings guidance, however, is only provided on an adjusted basis. It is not feasible to provide GAAP EPS guidance because the items excluded, other than the amortization expense, are difficult to predict and estimate and are primarily dependent on future events, such as acquisitions and decisions concerning the location and timing of facility consolidations.
Conference Call
Thermo Fisher Scientific will hold its earnings conference call today, April 24, 2013, at 8:30 a.m. Eastern time. To listen, dial (866) 804-6922 within the U.S. or (857) 350-1668 outside the U.S., and use conference ID 27442368. You may also listen to the call live on our website, www.thermofisher.com, by clicking on “Investors.” You will find this press release, including the accompanying reconciliation of non-GAAP financial measures and related information, in that section of our website under “Financial Results.” An audio archive of the call will be available under “Webcasts and Presentations” through Friday, May 17, 2013.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science. Our mission is to enable our customers to make the world healthier, cleaner and safer. With revenue of $13 billion, we have 39,000 employees and serve customers within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as in environmental and process control industries. We create value for our key stakeholders through three premier brands, Thermo Scientific, Fisher Scientific and Unity Lab Services, which offer a unique combination of innovative technologies, convenient purchasing options and a single solution for laboratory operations management. Our products and services help our customers solve complex analytical challenges, improve patient diagnostics and increase laboratory productivity. Visit www.thermofisher.com.
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 such forward-looking statements are set forth in the company’s Annual Report on Form 10-K for the year ended December 31, 2012, under the caption “Risk Factors,” which is on file with the Securities and Exchange Commission and available in the “Investors” section of our website under the heading “SEC Filings.” Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: 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 exchange rate fluctuations on international operations; the effect of healthcare reform legislation; use and protection of intellectual property; the effect of changes in governmental regulations; and the effect of laws and regulations governing government contracts. 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.
