TMO - Earnings call transcript Q1 2020 | Thermo Fisher Scientific Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2020 First Quarter Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today's conference is being recorded. [Operator Instructions]

introduce for to call, like would our the moderator Mr. I Vice President, Apicerno, Investor Kenneth Relations. Mr. begin the may you Apicerno, call.

Kenneth Apicerno

and us. morning Good thank you for joining

call and Chief is today Officer. and and with our Financial Williamson, the Stephen President President Officer; Chief Marc Vice Senior Chairman, Executive On Casper, me

release archived thermofisher.com, May that note press under our future XXXX of Webcasts Presentations Financial until be heading the XXXX. quarter is Investors A Section the Results. live and under being website in heading our Please the webcast of X, earnings copy is call the expectations of will the this first on of our website and Section Investors and available

website in report company's filed March those Risk available discussed with file under Exchange XX, filings. and and the which about constitute Harbor provisions and caption So, purposes materially me Commission, Harbor a XX-K company's December XX, Reform from those cover before Safe Various Safe statements the year important forward-looking of also various X-K SEC the in result begin, by including XXXX. annual expectations, XXXX the forward-looking Private the differ the our briefly Form report section Factors, Act let results the plans are as and company's on of statements also the Actual future these may for for on of under prospects factors, our Form remarks the current Litigation on Securities we make ended under XXXX statement. that indicated we of on the Securities heading may Investor

as we disclaim should our change. some do obligation today. any elect point any statements on may representing to you statements so we update our views even in of the to date rely Therefore as forward-looking at subsequent future, specifically these While if not estimates to forward-looking

of GAAP. comparable our A in call, to directly GAAP with Accepted measures website financial non-GAAP release and reconciliation earnings XXXX not measures or measures the this press Accounting prepared expectations under of also to the referring we'll of Generally the during in Information. accordance quarter Principles future first these section our Also be Investors most is certain available in heading financial Financial the and

I'll So to that, turn the with over Marc. call

Marc Casper

Thank Ken. everyone. joining Good us for for quarter morning XXXX today call. you, first you Thank our

Let you and families are me hope can of as expected start faring time. well by that saying this in all I be extraordinary as your

a stay team are all protocols here as the following We doing and leadership fine to safe.

our last Obviously the dramatically earnings changed world since call. has

normal our situation. our managing I'll topics a remarks principles we we'll morning. in my by One, modifications cover, guiding to the few So to through this for that make addition format explaining this begin is unique

financial give little level CFO, color society's our revenue to supporting also over talk on response. a to of abbreviate going my overview, section our in performance briefly to specifically I'll Williamson, you high growth my COVID-XX involvement our turn and use about In to that strategy quarter. highlights in Stephen most it the more am typical I

humbled by our of incredibly way deliver really the our circumstances. Let highlights to stepped me world the the quarter It up tough commitment strength good I'm teams up very front colleagues right also and our say under that of the just around a company.

out colleges So we running threefold; are is approach company manage serve with business our so appropriately make come and three, so two, the our one, starting can stronger. guiding pandemic our our our through we managing can keep for principles, customers; safe; our sure

these of more each into deeply. delve a me little Let

ensuring First, of safety is colleagues. This our is the paramount.

most. of sure a when our are customers need us continue our they facilities at at While time are a significant make to to our to number working of can us many colleagues we serve coming home,

guidance CDC working team health our and local outside us one make colleagues numerous cleaner, enable and implemented prouder of I the regulations following panel XX,XXX insights. of and our sites giving be to for customers experts we've to protocols additional medical world together We've safer. and that's assembled safety an also mission, fulfill couldn't healthier, our to as which our is at company's

has more mission right than relevant it Our is never now. been

during at create COVID-XX to our Our disruption. we more process responding operate whether our the their to the I'm continuity for second have has pandemic hit, are one Once teams guiding support principle situation. they is period work continued immediately our sites so that incident sites maintain we and response directly protocols broadly. can challenges chains pleased and supply presented business of our navigating managing the customers, say a minimal continuing this to new to to established or by every experienced

This achievement system. amazing and the dedication speaks built of the business strong teams foundation we've PPI through operational to our our

our gratifying. especially we customers has Our ensuring time are during in this overwhelming industry-leading our also scale The been is continue significant can appreciation we advantage a to from customers. hearing serve

principle appropriately even Our manage the so an industry through period come third this guiding we company is leader. to stronger

successfully experienced periods through benefit around the disruption have and team a of We of the managed to financial other company the XXXX crisis the that very of world. XXXX

We when lockdown start the strategy, in on In our put global and well. generate mobilized the quickly team as challenges, crisis. to executing to the our case, we new pandemic with this China long-term a while navigate that customers our respond short-term ensuring we opportunities help focus strong growth also successfully

in regions our pivoting their short-term teams accelerate growth to the other also world. plans of We

deployment thought on continued a we the out system, stepped of business In capital addition, to execute strong our innovation, continued PPI our up focus strategy. impact well and

All this come of period out to allow activities of stronger. us even will these

as $X.XX financial to revenue operating QX reported $X.XX increased in our X% our Adjusted Turning was X% release in increased our saw in margin year-over-year income results, billion you adjusted press our to operating and billion. QX. XX.X% to

to X% adjusted quarter, the increase in we over is share $X.XX grew year. Finally, per which last EPS a

our provide how color to assessed to it over Stephen on Stephen? At I'll some we point, this performance. revenue briefly turn QX

Stephen Williamson

hope I everyone. morning healthy. families are good you your and and safe and that Marc Thanks

at three look is QX it growth it performance, I I break down As elements. organic to think our best into

that due revenue where we've and able quickly been we've This to research. unique tailwinds First are able to additional been testing, to protection, create specific to around respond COVID-XX. is needs customer the

X% as Then X%, the in organic headwinds that unable where assess, growth, were customers we best tailwind work have China. largely QX or essentially caused mainly down COVID-XX, customer the there by have in and believe can around as been is the final headwinds shutdowns our revenue of was COVID-XX around shut COVID-XX the by to of is driven we element The And rest completely. of revenue growth. been

about quarter. the was in, round X% net all So in headwind COVID-XX

I of COVID-XX one revenue. day drive think across growth offset the the deliver strong really less business tailwinds quarter. headwinds on from well just we the capture for under worked It help QX QX organic also X% selling a the to to of is headwind reflected versus last worth and that to to total year, mentioning performance X%

detail performance I'll give you on. more later our on

now, it Marc. back to over hand I'll For

Marc Casper

Stephen. performed out. the To the we quarter in became impact significant summarize, pandemic Thanks well played of more QX though the as even

maintain execute the to As mentioned can contingency we against we that always downside. potential buffer past, I in plans have

the decisive spread received control to to and began began the the ramp COVID-XX time for action accelerated and other quick to offset we When same authorization more my emergency impact. use production costs cover China of up our remarks. growing we I'll from details global diagnostic negative We countries, and further to took At of virus development later test. meet these in of some demand. to revenue

let market, for end by me a of performance to couple overall comments Turning start with context.

and had the good Our was strong outbreak China. we year underlying growth in QX the momentum early very in in before

in approximately quite North and and well was late most March. we in the actually see impact very did those affected Europe As the geographies you'd expect, quarter, our in business down didn’t the America China until in XX%. in quarter

more the and especially some strong end how in by of color unaffected pharma in on biotech, had pandemic services QX our markets Pharma I'll we high performance end out strong another markets. give bio was with single-digit our our the essentially and growth. saw largest We quarter played quarter in the and four businesses. production very you

the market and our included performance and In This COVID-XX diagnostic low uptake molecular most which leveraged instruments our controls. from diagnostics our double-digits. real-time across response. healthcare rapid We end the of businesses we grew benefited kits in PCR our and and this also had good assays

to Turning market growth in applied, this declined end industrial QX. and XX% in

affected COVID-XX Our was related performance by shutdowns here primarily China. in

to to in quarter. through To Finally, in the later executed all and very wrap we government, we academic QX other first digits commentary, the market in began close up lows China in then in well QX. growth our countries the and end managed and in drive academic in as dynamics mid-single declined

what our and The a unrivaled put spotlight morning as Turning the of cover I'll as growth to we company strategy the in apart has us strategy. elements of what leader a growth do strategy, the demonstrates our pandemic the our success our clearly of set on of significance industry. this three much

stop delivering around scale solutions that of governments value to proposition turned company spread pandemic. markets, unique emerging and us to commitment the our innovating, Our institutions made for continuously the the healthcare leveraging customer has have to in the and world

introduced chromatography Core of business pick our In number and BioProcess And HPLC Before HPLC Thermo a to lineup. in I spectrometry Labtainer company. applied therapies the quickly system cover markets. and well further of accelerate Vanquish let Pro instrument here new The our Vanquish business growth products across and here, expands are bio Scientific in we new production initiatives I'll launched mention in that a vaccines. productivity our we We customer involvement Scientific me mass Thermo increase highlights. launched to successful Container progressing Core the our QX two production

role story healthcare to in working obviously This we've as around was support customers the in and pharmaceutical industry and governments the their levels well a to QX as But of pandemic. closely complex important and world, is challenge at the the our with highest biotech been respond the efforts. most agencies helping

focus. key To I'll overview our simplify of in contributions frame four the areas

our healthcare a market channel, essential our gloves, respirators, healthcare equipment channel workers. We're the first hands market is of and to and The and face from safety other shields, range protective masks, everything personal providing protect the through sanitizer. research and

for The vaccines. and medical Disease researchers and it. neutralize the plates spike immediately during and protein Chinese labs clinical area how infection. China, virus Control and country. the independent Thermo relied kits it as and accelerating PCR and of across support These the determine the world and to second understand prefilled and our to professionals well of next how to Centers service viruses Scientific structure on the to understand analyzing as interacts to XXxX the our instruments, the Prevention, for mobilized hospitals Around our findings Scientists focus the receptor In to microscope we the way the development used are Krios, treatments cellular instruments cryo-electron it. detect virus its generation sequencing is paving

testing development term third was The area running. activity diagnostic critical is spread testing short the focus get in the most the up diagnostic stop of of and economy is the to up the capability. strategy, which and our back knew enabling ramping important help We a

So the what the early applied bodies on use public incredible China, COVID-XX biosystems TaqPath around This on by laboratories. developed seeing were regulatory quickly involving we development with based real team health for world. we was in a effort clinical kit critical and collaboration combo

from mid-March CE ranging a Canada Europe led our and based authorization to We Australia. of use Brazil, in in use nearly authorized and followed India FDA number diagnostic have test. the emergency XX COVID-XX authorizations in Mark U.S. to PCR by other of the that countries countries Today, received

million standard We globe PCR-based are now as our the and of is week X producing gold accuracy. tests given these of workflow more widely its than level high used the across per

at testing the side and the We protocols. develop went to world strategies, side involvement also by both level about that options, the the But testing control launched diagnostics and beyond to federal in know them the worked validate effective AcroMetrix design specialty in the it important our producing is developing COVID-XX and tests. governments monitor the state and with We around to help RNA educate U.S. tests. business our and

in been with workflow four health made governments, still to remarkable labs. our we've last be and hospitals, more how the truly implementing public needs close we've But labs, much reference It important or of weeks. Based collaboration is to In in whether testing has the the the are everything done very available. learned, virus, until facilitate on reopening capacity person will knowing expand to further we've economy. not vaccines a continue progress be to

dozens biotech the Pharma of to top working of and which partnering leads That me customers and fourth number of the vaccines. projects. treatments area with focus, a development are is pandemic who on We're of related

Our showing treating network are involvement services in leveraging pharma COVID-XX. some existing effectiveness includes produce that our to drugs

also our develop are new We're as short-term solutions here. vaccines therapies of most the promising and supporting helping We some well. customers

of to We capacity are sterile a expansion developed. fill-finish is once our working accelerate vaccine to the support successful production

bio purification our is solution providing accelerate a addition, to business vaccine In production scalable production.

we significant been will in learn still is much be and as made Thermo all the has leading While done disease. more role progress COVID-XX, a play more about Fisher collectively to there combating

during capital us now on very was Let billion with capital, turn bought our for and quarter XX%. deployment. me It too. return increased by the of to that a front back of active our stock Starting we dividend $X.X

we're the their excellent deal, since QIAGEN more with billion. adding In we Thermo to terms acquisition X, even company. fit all transaction happened world for given in of our our announced M&A, capabilities on announced and about of we is March Fisher the $XX.X an excited The that's

tests From news And regarded. molecular preparation also life-sciences a diagnostics a the in ours. specialty diagnosing their will QIAGEN sure well plays I'm our perfect QIAGEN's seen complementary capabilities. provider technologies, role leading sample for very to From that and our a the test in infectious and strategic company lens, is perspective complement of a of access QuantiFERON wider diagnostics to COVID-XX global clinical range is a is as solution very tuberculosis customers disease. have to customer you've a and

create and return customers for will genetic technologies. transaction with analysis the shareholders. our excellent the Our QIAGEN's sample complementary biosciences will And also from preparation life-sciences our and offering of collaboration benefit assay

We by our EPS total to immediately achieve we synergies expect $XXX close. and expect million after accretion strong adjusted close three to in after year

completed we'll integration process. steps financing the We of regulatory with In the terms our of and portion begin next offerings moving here, the we're and Euro a U.S. through planning. bond

complete to first still in of track XXXX. on half we're transaction So the the

you a remarks, ago would prepared through weeks But usually our At the were guidance we this my give know, point for level year. due I of as in guidance view you high our annual XXXX There variables case evolving to impact. equally companies customer environment that I'm are related very COVID-XX the is investors so This many and challenging. in the forecasting pandemic for for sure analysts. and current most unique make a

for will of some specific of providing dependent update on provide organic QX about be potential that provide today, growth. on guidance plays an how out. commentary won't he Stephen guidance While annual COVID-XX a less thinking we how He will are some our also range elements of on are outcomes the

We you be are as trying transparent own to outcomes as of XXXX. range your of in we help us the can assessment in for to

will we clarity update the later a As substantive gain year. we in provide with more you

supporting takeaways. to Before through well a me making and the We're turn I managing time, on a impact over Stephen, you very huge protecting let business give few unprecedented colleagues, customers, this call our society. our the

capabilities effectively determined looking period adding deploying our their and to our execute QIAGEN very to of out to of position continue to I'm about The by long-term to be excited even fundamentals very our our positive and continued will and industry We we're our come industry leader. this an growth forward stronger strategy strengthening capital. company.

I'm to call that, back over Stephen. now the to going With hand

Stephen Williamson

overview Thanks Marc begin Marc. first total for finish segments company, as with four just I'll around on then comments results the some color our and guidance with of quarter outlined. provide I'll the some an

organic approximately foreign components acquisitions day just and X% the earnings adjusted the And QX one saw growth, top X% our from GAAP of reported year-over-year. with we year-over-year. impact approximately had X% EPS quarter an X% reminder a The revenue QX QX down revenue increase divestitures to year. year line of The and QX headwind this selling reported in starting results, the our $X.XX. from last of included of on our by a release EPS press to X% $X.XX we growth On exchange performance, was components net in of grew under QX So in X% as our about as less QX X%. you in X%. grew

in decline low driven the rest mid-teens Turning quarter, the mentioned, North the growth Europe in XX% to approximately grew the China previously America a during geography the as single digits. of by and Asia-Pacific grew in XX%, mid-single declined by Marc grew our approximately of digit, in world

Looking last operating and our XX X% at performance, QX increased was operating lower year. income basis adjusted adjusted XX.X%, QX operational than margin points

As XX QX. in the basis expected, reinvestment phasing the of year's of last and about in negative benefits acquisitions margins of debt our investment recent refinancing on a impact points had

strong drove PPI our on the impact impact more In from from Business System margins offset addition, team than the COVID-XX. to

QX dilutive divestiture the on of margin. revenue, operating of at $X.XX XX As $XX million was million end year-over-year a on about of $XX and operating and Anatomical approximately in XXXX Pathology basis adjusted XXXX headwind adjusted income our business points the reminder, QX the on

on the quarter our was XXXX. year margin QX Moving than in XX%, X.X%. came total XX year of in of QX R&D of down margin. versus was quarter those in company an in basis similar XX% gross adjusted our of I operating details for manufacturing mentioned the XX P&L, of as R&D QX increase expense basis revenue drivers and to came prior just the a of adjusted in QX SG&A lower Adjusted points the percent to basis Total the with in at last points revenue, revenue points XX X.X% at

interest of line refinancing was reduction Looking year. by expense at the issued our net the we of down expense for $XX before a $XX was million net results to just QX was foreign income interest end last million had cash quarter QX debt million, quarter related $XX income XXXX on to our due impact The our in the driven expense pooling non-operating actions. immaterial in The million primarily Adjusted largely below arrangements. exchange net the an this by from in than changes our quarter the higher results. $XX QX other XXXX and

the adjusted versus XXX lower the points basis X million repurchases QX, in XX.X% net rate quarter expectations QX dilution. XX and million diluted by average option last up Our with driven of our year of in was shares year-over-year tax in line share and and impact

million cash million net of Turning cash was million. was QX continuing deducting the operations to through sheet, flow free balance approximately $XXX $XXX $XXX capital expenditures flow cash after and flow from and

$XX approximately buybacks During billion QX to shareholders of capital we dividends. $X.X with returned and in million share

process the QIAGEN started we issuance we QX debt. the for U.S. we notes. for cash In $X securing March And $X.X denominated ended billion the raised of In billion the late and financing acquisition. of approximately permanent quarter dollar of in $XX total billion with senior

was euro after XX.X% leverage from quarter at end of total up on the the notes. the raised my denominated as company Shortly XX times issuance performance, net €X.X Our last we billion additional was ratio we EBITDA to through continue gross the returns. debt adjusted adjusted up of an debt basis. senior X.X on And to year times comments basis very generate three ROIC our end a wrapping points QX quarter strong

the Now on of color the for four quarter. provide segments business performance some our you with

and Before revenue resulted and lab The different of I in the growth services. get into to headwind for of for for the Diagnostics, tailwind Analytical on COVID-XX tailwinds those net and slight quarter. had a a slight details, Specialty headwind in Life-Science I segments organic COVID-XX headwind and Instruments Solutions that impacts in note products mid-teens wanted levels the

specialty than a the To were pieces mainly half more services. evenly testing the realized and to diagnostics were tailwinds The tailwinds kits. Life-Science starting little lab into spread Solutions the of that in tailwinds, products break rest and between with relating the two

the approximately spread About segment and that incurred rest segments. in headwinds, Instruments of two quarter the the Analytical business Solutions the China. were by were our largely headwinds the driven remaining a among Life-Science in to Moving half in scale

was XX% quarter we So production XX%, sciences strong Science in the growth XX% Life moving pull-through we and and businesses. revenue investments was continued Science points on drove Solutions Life Solutions, the bio adjusted very adjusted see mix. by offset segment increased year-over-year. income strategic volume up with operating In QX was XXX growth revenue operating In to which basis quarter to genetic led strong in productivity, details, the margin reported this XX%. starting organic segment and QX partially by and this in business segment in increased and

In Instruments XX%. XX% organic the by QX Analytical declined decreased reported revenue in segment, and revenue

strong the mentioned to of the in negative I for significant couple comps in as in quarters, segment the this earlier, was the all segment. impact this the case of very growth also prior-year we was COVID-XX businesses and As past businesses had

QX volumes more by XXX quarter, the decreased basis adjusted down operating XX.X%, margin operating lower than pull-through saw in XX% Instruments was business points productivity, adjusted we the mix. and Analytical income very offset on year-over-year. strong was which In and

segment X% this at led a saw the that Turning channel to as divestiture. XXXX. is Clinical Diagnostics end QX a by strong divested and Transplant included previously from we business, and Specialty which Diagnostics segment, segment, of growth this reminder, businesses. Anatomical the X% which the decreased included the in We market headwind our Adjusted Pathology operating income Healthcare our

was down prior we year. basis operating margin leverage. productivity points XX.X%, In strong from quarter, and volume saw the the Adjusted XX

investments, than business this was However, offset strategic and the divestiture. mix, more by

revenue led basis in adjusted strategic leverage, more the X% XX mix channel. for and quarter, and and strong growth business increased we Adjusted in than was investments, segment points. QX offset increased lower by a segment was the revenue volume in the QX Products the operating the X%. market growth Services and Finally, Laboratory by In segment, within business prior-year but which income and was safety particularly operating pharma X%, In services the acquisitions. and the reported organic the than research margin saw by the was unfavorable recent XX.X%, quarter, was productivity this

guidance, our pandemic ago Marc impact, weeks a to XXXX withdrew the customer earlier, guidance. we So few to annual mentioned due COVID-XX evolving related as turning and

outlook So you the usual and I providing will with not detail today. be

that of on I'll COVID-XX an insights growth. we However, some QX on out. a I of of on, Then guidance you thought some potential range later give impact it organic you thinking the update would plays dependent provide how elements how about for to the are of on be outcomes less are helpful

the So in own hopefully year. your for this will modeling assist you

So start me outcome that how for let many are drive There organic we will framing growth. are the QX quarter. with variables the

estimates and XX, variables somewhere between will growth best XX%. XX%, flat current results a negative Our these play in organic of out how QX

you Let QX. on the color that me outcome - some provide key drive on two variables primarily for the will

First is revenue growth, the and of COVID-XX is scale headwinds, the related market combination scale second of And of underlying related tailwinds. COVID-XX the the our share gain activity.

revenue of additional tailwinds, to the testing somewhere we QX range. kits in the and our by million where up we to or end Regarding this estimate million, $XXX range testing will level between outcomes XX% The using be customers, for growth. our $XXX proprietary determine X% of an undertaken of

headwinds demand, by COVID-XX the of QX, driven underlying is and a the net by gain to largely are operating market reduced in level. range the headwind a This combination at estimate of to driven share altogether XX%. for level XX% growth related is down whether customer the our which be range We or they activity of turn of shut

is chain, of largely this continuity year. supply to has our factor so unaffected Another consider been far the which

relatively manage still of COVID-XX including by our It's businesses that but for demand through worth business. sites, production any our We potential to at is unaffected. need business relatively COVID-XX of the impact and these majority business are bio pharma our large unaffected services noting our parts customer

a up in up country including how supply depend of on the activity, we in of and COVID-XX outcomes the our quickly lifted, chain. are of impact the range on headwinds factors, end customers and speed the combination will they state Where impact their COVID-XX which ramp our for restrictions,

times to rely to that on our right our ability seeing the confident over In we're you challenging our playing and built trusted need great this, years relationships share to across now we've that continue customers your partners globe. remain with the in drive We gains. like with out

and this XX%. at put current as what between you So the somewhere feel be we negative appropriate broad is on a now, this we outcomes of all variables I know for together, for where growth I range mentioned, is best understand to QX. QX the think outside a this involved. it's assessment based flat organic are range, could growth of when we good this but estimate our our this for There time way about circumstances prospects think it's the and but given range, is we

harder call. begin to normal Should level, customer it well-positioned QX beyond level economy to the and revert we're global revenue capture to a demand to gets appropriate Looking more really of an Throughout our crisis, economy customer in relationships. us are we our That of this strengths when better position highlighting even proposition. really an the improves. growth. value customer puts the deepening It's

it I'll assumed now So the FX year. of the move that start up a year revenue. changes full are the is year-over-year With the X% at the to we rates. from an of is in elements X.X% due FX, on million modeling XXXX of for on to over assuming update some to headwind of regards This recent in $XXX or just

that approximately revenue of growth reflects $X.XX million and We Pathology XXXX the in reported business, acquisitions $XXX the $XX we assume dilution million, continue headwinds operating And continuing to of will our $XXX contribute sale XXXX. from completed revenue Anatomical of which respectively. expect to in the and million we're to income

As way a will reminder in and on two the less be extra QX days year. this there the phasing, falls, QX given day calendar one in there's

equates due the in as a the year the for completed is to result due interest for the the per $XXX costs impact be million deposits cost increase for of pre-funding $X.XX QIAGEN million million. expect This on of higher rates. offerings of to lower income the is bond interest expectation initial is earnings share on acquisition. increase adjusted than remainder recently our of to $XX year, for net the The to the XXXX. $XXX interest approximately We This recent cash reduction

will about income adjusted million assuming $XX be year. the other We're net for

to $X year capital the is net for initial of We driven range million the billion. by $XXX the to the timing be than expenditures expectation $XXX lower of in projects. expect This million

And our XXXX, XXX in full-year view is our call. guidance count a million XXX lower diluted all QX. slightly $X.X we of is capital of initial expect deployment, between total share buybacks. provided and estimate which the the than from terms the timing for million In average billion shares. due on of completed will the total unchanged were year to of buybacks QX This share This be the in we of

return shareholders that We're million $XXX from through for assuming to the also year This year. our is approximately capital we'll dividends. original unchanged assumptions of this

the helpful. for color the full So the while to year, not provide - full guidance usual I you additional being that found able hope

things up, you our same strength this current stronger with uncertain the as in and managed industry we To issues we've we'll as the good from an past through leader. will times and exit macro effectiveness can even performance as period very through wrap see manage QX,

With that, over the Ken. to call turn back I'll

Kenneth Apicerno

Operator, we're questions. Stephen. to for ready it up open Thanks,

Operator

Doug [Operator Instructions] Schenkel Cowen. from with First comes question

Doug Schenkel

Good morning. for And in as before thanks Thermo current questions, you working thank just the as needs colleagues your say want the pandemic. I serve and to I at to all ask my have quickly to you

capacity out some solutions. a like has is, other COVID-XX. for appears base of bit the question more other automated are some Unfortunately, solutions your and your a installed of ones Thermo less seems there, the compared the limited most first for tests to molecular the than manufacturing it So it bit is

tests If and between if characterization capacity, the agree So would mismatch coming the or believe the you my many I installed as can are producing base to million tests you you is production anything? are you the you there? guess of possibility sell with produce questions this, doing and as address what you guess, I more be are, of there if the going X months to producing Do are over week. per demand

many qPCR how either internally actually with automation improve can finally, systems And there are or that share run are solutions? working then, these you you kits? can externally to partners Third, out

Marc Casper

the for as for kind thanks well. Doug, questions, and thanks the words

part that So at as company interpretation also would largest globally. company production, kit with qPCR different the instruments I terms so than characterization look the have of do. And installed high-volume I - a we when base of that the you of are the in

are that of thousands up We of do tens ramping want and have that, instruments, this - to we're terms globally type qPCR right? of customers testing, of with in

a the in for and of instruments from capability, activities of labs, to been that So tests all in is of ramp-up have you installed base that that to types go out things, is terms supply usage is are of right? have our to will in all excess that. all low, train an people, volumes those happening, have relatively have demand those as low do build of fewer you world of test and you we of ultimately will in And get kits, massive of normal expectation relatively our the we know, these

well We are as on it. streamlining working use it easier to make workflows our and easier for to customers and

society's capacity playing ramping response meaningful we So good to role feel the testing in up about a around world.

Doug Schenkel

didn't and quarter. the I'm I instance characterization. to great. the reassuring answer QX, an stocking guess, where I pivot happy don't definitely just you very agree That's guys end that A of my talked think you with at back to about

I ahead, if in end this the and was do if most division it looking guess, I you evident people the was guess, Solution a that. of in over of then, stocking Life a the missed way that to extent expect any reverse you as at balance presumably and supply believe did, Science would dynamic, you I'm the quarter I'm up year? factor maybe to I tried what just was the build curious curious inventories If to

Marc Casper

didn't If increase you normal events. in if stocking the or real of we quarter, that kind exclude unusual is in products have exclude obviously, the of of end things, orders the one-time kind we of see didn't but see the towards any we our COVID - meaning for the all business best all this you any estimate, related

the COVID, none of lots of had we of end and at much supply the location. sort of particular of orders we but terms ramping lots too as up be in really any quarter, supply, there would In obviously, the were

phenomenon there I our was don't So think real a stocking in results.

Stephen Williamson

bit but of results. on within terms in that it's Yes. noise a little orders I'd channel say around PPE, the of the the is edges

Doug Schenkel

Okay. testing. last lot we molecular one one, talked And about a

production. testing. similar through in doing your We many controls the companies for vaccine and on don't talked I only side? are Private about OEM major you You you involvement of arrangements, test your body IVD things you talked know about think reagents Label serology that

Marc Casper

market. question. testing make Thank what different we want that's sure partnerships thinking to anything instruments reach the in of would that way just to to our We you. looking serology on at for we're quality, is options have through. thank I world-class the something large we a and brand our put different Doug, and that's because be and final in going you So some say we installed very are base a

Doug Schenkel

thank Okay, you.

Operator

JP from Next with Peterson Tycho comes question Morgan.

Tycho Peterson

of and situation, given progressed a to that then could we NIH last if packages. chatter trends March. the wondering of a last And one in there ahead, an Hey, on I'm the all stimulus thanks. weeks unique things to couple able comment we're April of the is bit you're weeks looking versus two little Marc, in get of how have component

DC, to be curious on You tend so to there? views your pretty close just

Marc Casper

we embedded of outlook. markets. our them is dynamics we the Tycho, so range think QX, so the all for what would see the first all I the reflected the on March, final how of that's Yes, two for thanks about our When the in Right? weeks characterize the reflected range, I of question. as two end upon right weeks results here's guidance April, in QX, When we of

production our and see end side. look at would to on you We If markets, market. with end start activity good pharma four our it's largest biotech, expect

ramped R&D activities COVID-XX have the restrictions, based on softer by down R&D generated and on some demand pharma biotech, and et as certain within Additional spend the response customers impact cetera. just site

it. I how that's market characterize largest our would So

part are of going on related to we're the we've from COVID-XX of to testing the degree April. And based things non-COVID in for because unCOVID will related business get Diagnostics going activities, get early this normalcy or system. benefit impacted March obviously seen significant end healthcare and of the general headwinds you face until in what our and some Healthcare more be towards to

going easing and pace and of largely economy And results Industrial the government we are restrictions. the of Government then think applied, reopening and in Academic to of be the driven the by

helpful. that's hopefully, So,

Tycho Peterson

how you And handicap… would

Marc Casper

would about this We talk later.

Tycho Peterson

in last it's opening hearing open some something the know the how talk but fall? and you they risk may in you're early, not is the I Is would of universities that January. from Yes handicap customers? there one,

Marc Casper

most The reopening - see I'll not Right? universities you The have the Even reopen. It's starting universities helpful. but and economy activities are where it's universities every China universities, closed, to are probably the our activity. Right? has haven't So, been yet. reopened use even customers, experience. university, of to starting at the research you at reopening, research but

to do And when the what what customers are I we think hearing like in return a they of aggressive the is about down. world, think about us view, how but back look them one strategy on their that's had from they discussions September about school asking other they're activities research a help through getting parts up running hand, to starting think shut also they're and if

So, our best it's evolving, that's right now. but view

Tycho Peterson

of vaccine in think and a then, about the there appreciate incremental you your just talk about end I Patheon development how the market we lastly, but Patheon is now? there, needed on think as XQ, can positioned to tailwinds And COVID your there little needs on capabilities and that's commentary headwinds kind the support scale-up for and is you and

Marc Casper

Yes.

areas the one the of is unfolds. the capability four meaningfully that If our likely about ramp year focus, as you is up think to pharma services

that's get that So you our which and actually ones fill-finish the about on would deliver how you to we working we up are capabilities, trying vaccine, sterile governmental have and are And an enormous prioritize it. some to which ramping we so guidance - to is forth. about amount ultimately would of with how think we are projects

that around be put So to successful to administered it the you able innovator to the world. going is, whoever be form are need can in a

to with in are help we that process. So governments working

that very activity of meaningful solution level, we believe role Thanks, now is this be that could do here. expect play part right of high very will time. in that not meaningful we Activity we because and over dollars, relationships, So, the Tycho. our a

Tycho Peterson

you. Thank Okay.

Operator

Your question with Instructions] Vijay next ISI. comes [Operator Evercore Kumar from

Vijay Kumar

question Hey, for guys. on a taking solid my congrats and Thanks XQ.

minus here, commentary - the I'd head what in? and XX, on of Is of QX XX maybe neck April details? color, some does appreciate headwinds the that maybe bake Just shut May, for that all guidance flat to for down assuming minus the

that economic mentioned, maybe And Maybe the one Thermo's to should related decremental think scenario? performed Marc, about talk to portfolio the severe through 'XX, resiliency I is how would in like you different minus that I you. recession Thank the of about XX in how that, Related margins - period? how we much the business a the think, think, shutdown exiting is 'XX. versus portfolio a now

Marc Casper

didn't was Vijay, say, now. planning would The can't I of - we'd thanks are for like, well-positioned headwinds we we actively to managed of remember one, portfolio portfolio. planning particular us. economic And are we port this consciously thrown have We for the it ago, funny, does I a lots resiliency maybe have been our see questions. recession - so look dialogue We extremely about year that the had what it. it's whatever but think at we navigate

back we have instrument of heavily the organic and portfolio were last was that with and result period recession, for that negative for cetera. focused, and obviously nature, you consumables the it biopharma, remember, in a sort And had industrially we we if focused more heavily the much et time X% a of

portfolio the So quite is strong.

gave terms outcomes In what of to drivers solutions the time, of terms question will how about of going our customer in top-line, in does to work, there's and the that like how because the there. part of is, about the range how talk two the we look to is relative rapidly period on know of does factors, all adoption normal. work impact the play return of in It's going on - we do we Stephen that. return That's to to be of QX, the is driver. range the which and ramp-up, how levels And COVID-related be largely within of our activity the then a out think strong base

not end more, bit little have get we range range. starts the to but the moderate, the unfolds normal, and bit meaning broad outlined return the scenarios, the as think covers end are normal, range a of if relatively to quarter a you I higher is ramp-up And the ramp-up at lower that likely customer range of more of customer the to little if you

to we positive. like But hoping you are do, environment, you any always flat you. Stephen, and range trying some to what it's comments bit right want to guidance, right, a going would or not is and get job to deliver execution the fabulous go way Our it's and little aspiration, to great margins aspiration things make there even that there? through take know, do a the to helps anything about or as we managing our to any and growth we're do

Stephen Williamson

Yes.

the to mix customers revenue, they call So come really outcomes because revenue so - the you of gets about number of the on harder of the margin range of is, how do dependent our where back even work? the level, of when work, variables range back it's if then to actually that to come is side, broad think because the down and revenue margins you - get involved to

it's range really of right variability ton precision, really with created but of So that's the of why it's new love answer degree a detail with guidance you we in and withdrew really, a reason for the our the and give I'd year. broad a full lot detailed unknowns and to COVID-XX

in detail clarity So candid as normalizes. or forward-looking providing look our reduces of of kind of forward the we'll continue level to I provide to more impact performance you and COVID-XX the actual usual

Marc Casper

Vijay. Thanks,

Operator

of comes America. And De Derik from Bruin next Bank with question

Derik de Bruin

Hey. best safe environment. and color. I'm Good this and A glad the morning of is luck thanks of questions. for all couple everybody in

seen And cancelations dependent on at guess, of of I business? upon sitting sort backlog? I sitting just timing, you - but orders some I'm on and goes recession-sensitive orders I on it's shipped particularly of dock course, bit what's any about out. of installed on your looking side the the expect mean, have to you can talk there to waiting one, and to to waiting a this lab just instrument basically realize, and what have you be wondering as go your the think, just first curious that's I there little more

Marc Casper

Derik, for Yes. thanks the question.

a instruments And both capacity to a order for sure test that. up good being kits, well make - customers our book sense served. backlog our strong and what have so ramping will our is we to and We are we working we're do of have and we're

societal get Our working emails who heroes. many thanking are clinical -- specialists, colleagues us running. are each labs around field they and it so have takes from I and to our applications up engineers service whatever our the customers for weekends,

remarkable been it's So things those collaboration to ramp up.

there In would only deferral. really is it's and more we that orders, area be of terms expect of around going potential any cancellation the Instruments, in to probably Analytical

not give an me you construction not a might open, ready delayed. labs facility, have been example, labs Let for new Cryo-EM

it's things patterns instrument now, that look minimal from the of about of has But be our less seeing of it orders you very would So been I but of think really we're likely in at. a experience can delay when would the bit that, cancellation kinds in business. And than orders right some those revenue. are you convert to

Derik de Bruin

of just complicated? some basically anti-hospital does talked a some bit be question, a provision. need an obviously, I'm current little noise to, I got what bit curious, protect deal to been to more situation just and if basically environment And about takeover You looking is follow-up make you situation of the with regulatory little can they more that to you about a if more the bit Great. Germany alluded you've out realize regulatory of consider the QIAGEN QIAGEN? this little a pending. COVID identified products But divested strategic sort assets. the recently you've -- There's talk just asked

Marc Casper

first advised. would I What of all, say we're Yes. well very is,

strong track societal part record. period one across We have of have team, the And amazing governmental a the solution. is the that this being good developed a relationships amount world about that's the of in been we things of

the So their most in areas. health would if governments known us of you'd academic or research pre this world, have say really

to at do good the a things. know trying consider most governments us levels the really right leadership us and company of would collaborative senior Most

with my we based member Presidents, that helps myself, had regulatory Stephens, instinct I through Ministers, have us - the others That's cetera. go interactions Marc, think Prime process. ultimately as et of the and that on all

Derik de Bruin

if and final one just could clinical the in or business about part in business? like business, sound but much, talk doesn't about you think curious around. given trial biopharma cancellations were of postponed? about seeing you that trials potential trial It Obviously, I'm surprised, I'd that guess, the going business being have And seeing noise headwinds all logistics recently sort be delayed there. Great. you the of just I you question, the services we're some

Marc Casper

Yes.

of that there in activity. be able be to impact trials. you So level on to Customers also some some clinical reengage sure you're clinical trials will have want right for

ready, going activity, as us So that some so some on be of actually of have you that they're with working to well.

You trials have clinical on COVID going as activity well. up

of But mix. services business, of trials okay. the would it's some activity be have the a got you think would I that headwind potentially in pharma So the clinical the but portions it one

Stephen Williamson

are is Derik, to Yes. likely working lot now. there another oncology-related trials, right less element a slowing of trials which actually be that actually the are are on down

Derik de Bruin

for color. Great. the Thank you

Marc Casper

Thanks.

Operator

comes with question Beuchaw Research. Wolfe Steve Next from

Steve Beuchaw

others wrapped ask you Hi, good them. you're I lot to a thank doing easy easy which really, compared try thank and a I'll testing enabling morning. one, lead to I have an you. just uncertainty all front maybe for with the would of of big know a everything on us move to also couple around forward, ones that

terms on could give you wonder of last what retrospective bit? the XQ? I what for like faster? struggling us days looks the could little in What if the world reopening, think China growth a still relative are you've what a seen you XX areas of to any areas First of of reopened if and And in is, in China have the sense you maybe a profile bit rest

Marc Casper

Yes.

for thanks Steve, question. the So,

XX% have at so number. sort would and that, I activity in team not end no team, normal just XX% look they other level. team of that's in to they in parts very the level characterize work, relatively the So obviously because of there's now how I waters to I a relative more And week, to the is the the the earlier the of Right? coming right to it asked just of to active. is China quarter relative that asked of normal. starting sort the hard where China, varies of researchers the and of - terms research got there types we asked where And the but economy basically it's said at by customers, is team customers, back activity academic experienced

we as sort not there's new - outbreak that to takes and ramp of line. So that some quarter of expect unfolds, or provided the that off something trend it

So that's think about how we China. would

Steve Beuchaw

months, eventually, automated that that localized type more larger Thank partner systems as testing? coming care site evolving you do versus and labs on how and both as you very much. of see in versus dynamic versus to well necessarily not hopefully, delivered? hospitals what really I test then about my are now, on you tests being follow-up think they that. it. the where are going how kits extent appreciate are the but to right PCR Got commercial When relates volumes, And systems

Marc Casper

methodology. to Because - is CE-IVD playing on. on instruments use base, run platform platforms. The things, labs the large up they're doing other but do we're emergency an variety the question. of good Steve, can what's instrument of our that's you seeing our effectively And Right? our running what knowledge, the vast is on open ramping a the and And going number activity So, our installed are having can the authorization, where majority that is that our primarily approvals we're of out.

Steve. the you question, for thank So

Kenneth Apicerno

to going more. one take we're Operator, just

Operator

have ahead. from Brennan we go question with And Okay. Dan a UBS. Please

Dan Brennan

us little bio segments strong. guys. about being production research like for could You how you us color give within being kind Great. various a But the just walk questions, could little are QA/QC, Marc, different the you've flavor But on segments? of a times. business of a you in throughout through could Thanks you little more pharma talked commented give light, a couple across taking like the I was doing? biopharma, us hoping

like be about out we And then like - given today, think of companies the like, period? like possible health would a you I'm the just to it to cycle level potentially as as for spending come ahead you on? question, trying a begin could all expect of we through them, just acute is pharmaceutical through as large this the do the investments going we think COVID, and look actually of this benefit related the

Marc Casper

the for thanks Yes. Dan, questions.

our think briefly. from Strength and So, about first and the channel QX when a Very service, but quarter well. first had back good COVID performance, as I very quarter. let safety look pharma bio me pharma also research let market - in me biotech, strong at little production in impact and

would I So say, for kind quarter, of QX. a normal

the For side the that of up. know parse - trying I but will normally as we in but terms to and don't impact production forward-looking. already this that some on work through, with the trends to and the shut but in be of would research not ramp customer projects a We are I on planning to more in world, reduced they going on. reduced And I'm stuff, the conversations I've there headwind, people around QX, of try equation, labs had, are the from of COVID would kind expect similar coming many from will because on the help that the some down, ease then expect phase positive that that all impact activity terms

like, coming ready quite is, the on terms that switch sites, aggressively. interesting is in The all question. are questions, those you are those the question on of But in you asking questions to resupply flip stuff, do when

new we for like, the customers So well. are what's like are normal ourselves, look our planning

QX So that's the historical, QX-ish kind of timeframe. short-term

of the healthcare industry I infrastructure, industry. Longer be substantial in shows in It very going importance think, to to biotech and pharmaceutical term, investments responses there's pandemic.

bullish the be outlook will that. what So about I'm for very

for I industry as a beginning bullish what as well-positioned are and said so, the of prospects And the thoughts, I'm at we company. my long-term how very about are the

So you. thank

you experience, thoughts. wrap couple are stronger you even with ongoing our scale, no of out From going have my like look support I huge they always, And come We QX for as period me times on perspective, we're it industry this that Fisher depth thank hope our these, leader. in you of of then, of Thermo a updating Scientific. up to call. your doubt stay safe, advantages. Let our quick capabilities, our an until and forward to I

Operator

This concludes call. conference today's

You now disconnect. may

Thermo Fisher Scientific (TMO) 22 Apr 202020 Q1 Earnings call transcript