| | 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 Second Quarter 2015 Results
Raises Full-year Revenue and Earnings Guidance
WALTHAM, Mass. (July 22, 2015) – Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the second quarter of 2015, ended June 27, 2015.
Second Quarter 2015 Highlights
| · | Grew adjusted earnings per share (EPS) by 7% to $1.84. |
| · | Delivered revenue of $4.27 billion. |
| · | Expanded adjusted operating margin by 90 basis points to 22.3%. |
| · | Launched a number of new products, including the Orbitrap Fusion Lumos Tribrid mass spectrometer for proteomics, Q Exactive GC-MS/MS for research and applied markets, and the cloud-enabled QuantStudio 3 and 5 real-time PCR systems for genomics applications. |
| · | Increased presence in emerging markets by opening a Customer Experience Center in Dubai to serve growing life sciences, healthcare and food safety markets across the Middle East. |
| · | Expanded bioproduction capabilities in the U.K. with a state-of-the-art facility for manufacturing dry powder media to capitalize on increasing global demand for biotherapeutics and vaccines. |
| · | Announced agreement to acquire Alfa Aesar for approximately $400 million to enhance offering of laboratory chemicals, solvents and reagents for research applications; expect to complete transaction by year end. |
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.”
“I’m pleased to report that we delivered a very strong quarter, which puts us in a great position at the halfway point of the year,” said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. “We fully leveraged our depth of capabilities to capture opportunities for growth and executed well to achieve excellent top- and bottom-line results.
“We made great progress during the quarter in executing our growth strategy. Among the highlights, we continued our strong momentum in technology innovation with significant new products that help our customers advance their work, from life sciences research to applied markets. In emerging markets, we opened a new demo center in Dubai to better serve our growing customer base in the Middle East. We also continue to effectively deploy our capital, announcing our agreement to acquire leading research chemicals producer, Alfa Aesar, which will further strengthen our unique customer value proposition.
“In summary, we delivered a solid first half, and we’re on track to achieve our growth goals for the year.”
Second Quarter 2015
For the second quarter of 2015, adjusted EPS grew 7% to $1.84, versus $1.72 in the second quarter of 2014. Revenue for the quarter was $4.27 billion in 2015, versus $4.32 billion in 2014. Organic revenue growth was 6%; divestitures, net of acquisitions, decreased revenue by 1% and currency translation reduced revenue by 6%. Adjusted operating income for the second quarter of 2015 increased 3% compared with the year-ago quarter, and adjusted operating margin expanded to 22.3%, compared with 21.4% in the second quarter of 2014.
GAAP diluted EPS in 2015 was $1.27, versus $.69 in the same quarter last year. The 2014 period included charges associated with the acquisition of Life Technologies. GAAP operating income for the second quarter of 2015 was $596 million, compared with $348 million in 2014. GAAP operating margin was 14.0%, compared with 8.1% in the 2014 quarter.
2015 Guidance Update
Thermo Fisher is raising its full-year 2015 revenue and adjusted EPS guidance to reflect current foreign currency exchange rates and strong operating performance. The company now expects revenue for 2015 to be in the range of $16.72 to $16.86 billion, versus its previous guidance of $16.67 to $16.83 billion. Thermo Fisher is also raising adjusted EPS guidance to a new range of $7.28 to $7.41 from the $7.25 to $7.40 previously announced, for 5% to 6% growth over 2014.
The 2015 guidance does not include the acquisition of Alfa Aesar or any 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 four business segments, as highlighted below. Year-over-year results were negatively affected by the impact of foreign currency exchange rates.
Life Sciences Solutions Segment
In the second quarter of 2015, Life Sciences Solutions Segment revenue grew to $1.13 billion, compared with revenue of $1.10 billion in the second quarter of 2014. Segment adjusted operating margin increased to 28.6%, compared with 27.1% in the 2014 quarter.
Analytical Instruments Segment
Analytical Instruments Segment revenue was $777 million in the second quarter of 2015, compared with revenue of $793 million in the second quarter of 2014. Segment adjusted operating margin increased to 18.0%, versus 16.4% in the 2014 quarter.
Specialty Diagnostics Segment
In the second quarter of 2015, Specialty Diagnostics Segment revenue was $817 million, compared with revenue of $855 million in the second quarter of 2014. Segment adjusted operating margin was 27.8%, compared with 27.6% in the year-ago quarter.
Laboratory Products and Services Segment
Laboratory Products and Services Segment revenue was $1.69 billion in the second quarter of 2015, compared with revenue of $1.70 billion in the 2014 quarter. Segment adjusted operating margin was 15.4%, versus 15.2% in the 2014 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. In 2015, based on acquisitions closed through the end of the second quarter, our adjusted EPS will exclude approximately $2.23 of expense for the amortization of acquisition-related intangible assets. 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, significant litigation-related matters, 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, July 22, 2015, at 8:30 a.m. Eastern time. To listen, dial (877) 201-0168 within the U.S. or (647) 788-4901 outside the U.S. 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, August 14, 2015.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving science, with revenues of $17 billion and approximately 50,000 employees in 50 countries. 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.
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 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, as well as the possibility that expected benefits related to the Life Technologies acquisition 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 Quarterly Report on Form 10-Q for the quarter ended March 28, 2015, 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.
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