TMO - Earnings call transcript Q2 2020 | Thermo Fisher Scientific Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2020 Second Quarter Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your moderator today, Mr. Kenneth Apicerno, Vice President, Investor Relations. Mr. begin. may you Apicerno,

Kenneth Apicerno

thank joining and you morning us. for Good

XXXX Officer. today Casper, Officer; being our the Chief Stephen call the President webcast Marc Section expectations me press with Financial and our XXXX. be President Executive A On XX, available live website until release Chairman, our Investors and our Presentations of call archived July is and of Section Senior thermofisher.com, Vice future under note, heading website will and the earnings Please second the in under this quarter Williamson, on of is and is Financial heading Investors Chief the and Webcasts of copy Results. the

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

to our we forward-looking the do specifically obligation statements any While at we change. some future, update if may so, estimates even in elect disclaim to point

measures of date our is release GAAP. as this prepared in forward-looking in financial reconciliation with or on A directly the rely to comparable Accepted of Financial financial views not be measures most of heading Generally measures also accordance second Also, during call, the earnings should you today. in expectations, to website and Principles these the as these future certain representing referring Accounting quarter statements Investors not GAAP under subsequent our available we'll therefore, and So, non-GAAP our section of Information. XXXX press to the any

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

Marc Casper

one Thank morning, us joining our with XX the navigated we quarter had during expectations call. prepared second today you an extraordinary you, our update call, QX Thermo before. been for we to difficult when ever thinking We deliver everyone. no our and Thank incredible Ken. years most I've our we Fisher, in performance. Good for the we provided on truly in our quarter for quarter seen environment best were environment just had, successfully an What seen gave we've QX XXXX the

effort strong pandemic. impact of disruption tireless teams world. Our the to helping our and lockdowns job remarkable results, around a did the COVID-XX customers customer material while created determination tailwinds, Their drove generating very respond of minimizing the by

morning. know a our supporting Thermo strengths. Our months covering capabilities, to most -- I’ll in industry-leading can performance talent and we've the importance on depth built a team our finest circumstances. among I of of our well, accomplished you We this shows forward the And team, QX this look that extremely some difficult back many of on of the as of the company. few Fisher in advantage quarter a society. perform past and most continuously the our on as as customers even of the our I think with scale period our what in our and in spotlight highlights always the put moments and role

across which exceeded with financial the I'll our board. results, start our So, expectations

billion. Adjusted operating expansion. XXX And our basis QX our XX% year-over-year to As operating $X.XX of increased was to adjusted release, XX% increased grew revenue you press billion. reported points margin which saw in $X.XX in in XX% to our QX, income

$X.XX the EPS in to with XX% resources our and QX quickly help Finally, adjusted pandemic speed by grew in the to we quarter. at per mobilized the outstanding We we scale, because our worked share globe. financial customers to delivered performance respond across such

solutions revenue generating approximately their $X.X Our met billion needs, COVID of tailwinds.

an Our fluid also aggressively And a parts in of future. set environment did teams the our even in to excellent job Company headwinds an mitigating up very appropriately Company. managed ourselves of and other the for brighter we

performance Turning markets. end to by our

Let with context. for start an me overall comment

of due degrees. activity And the As industry. from this managed end know, disruptions; one generated through the tailwinds varying impacted markets we on has each We our to pandemic Company our to greatly hand, significant this COVID-XX we On both, in our customer you headwinds and dynamic the exceptional significantly effectively response. deliver and to other, an quarter. work very reduced benefited saw

perform biotech, largest particularly and was we pharma XX%. to with markets. of our another under performance very pharma our the just growing in here businesses. We bioproduction starting well and services So, QX, continued four in great quarter had strong end It and

a over pandemic. applied. declined quarter and Turning XX% XX%. disruptions during due in Customers markets approximately to QX, were while just we industrial saw decline to government two these significantly We business the of by academic in affected the and end in

healthcare. in Finally, and diagnostics

COVID-XX test in an later deliver to significant we and meeting a the pandemic, market about XX% the visits end our our and as related supporting in providing decrease reagents our teams used with in well met put of over commentary, managing our diagnostic deliver customers proprietary outstanding Company media, were this effectively of in and instrumentation testing, QX. viral for my amazing and QX. growth the societal To saw for demand We're incredible the due able laboratory customers remarks. just I'll more While effort in testing kits, as we forth developed response involvement tests. headwinds growth while to And talk transport up wrap market doctor to our

safety talked guiding guiding principles to quarter. so we they're an our ensuring the to manage and my of agenda following our To the our to On the pandemic for customers, these through manage continuing appropriately, QX you, remind our stronger principle support we maintain about call, come even more continuity, our highlights bid three third, from is departed or business colleagues; second directly we the so to unprecedented times. their first the of broadly; industry period Company the I we're can Turning to and responding work whether is business leader. this out typical continue

QX, that serve a our our time running when has our at have continue business We've well. us successfully As safety we guiding need can customers numerous most. they to I reflect on at sites kept served those principles protocols us very implemented so

today focus And as Let me growth managing on executing a focus it's new of ensuring principle, and relentless the the while strategy generate Company that reiterate, long-term challenges successfully opportunities a combination on we navigate well. last short-term appropriately. guiding the to

carefully time, investing This this where key to invest the managing R&D long-term programs, even and for in impacted. the of accelerated business temporarily while parts continuing we've in growth. costs been position During includes to confidently share demand is gain business

our position biotherapeutic Mass returns American customer to levels. will For June, showing of Exploris the to to new more across research. Orbitrap advance types Spectrometry These virtual launched us investments at two in activity the example, well capture businesses had of normal great we we opportunities conference instruments a where Society as

the recognized science. why of experienced the been from before, never challenges navigating officials with therapies in most all we're development accelerate own reinforced They’re volume second and outreach by the incredible their healthcare we've to as overwhelmed globe, trying the I've of safety whether understand communities senior companies. around managing to a largest the or to the executives the leaders the of world's The world virus, top government of the protecting serving testing leader the had quarter vaccines. to institutions, of they're identify workforce

remain tools, of them diagnostics, the We're We innovating, vaccines. therapies are from enhancing strategy focused help continuously providing pandemic to supporting challenges best equipment, in of personal on our these and by as value the every our leveraging and well meet growth our protective we unique development executing the position response customer scale proposition. in involved to production and virtually research aspect as to because

cleaner, to manufacturing and of focus the the This world aspects highlights to to on of is our therapeutics. development healthier, it and enable going safer, mission our role vaccines I'm prominent morning, most play. Our the customers two we and critical and make involvement, and the testing, diagnostic

have First, continued capabilities. business testing. to in of a exceptional and was our play role a the quarter an It for given we us, expand created COVID-XX just We months highlights. few in some cover I'll line the diagnostics. major

role our for know, used regulatory expanded many industry-leading COVID-XX a provide As has and approvals our around our in reagents lab role developed TaqPath And kit. in support tests. played customers' March to tests always we when COVID-XX our world. combo back our the franchise But, consumables you ability received PCR significantly

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Our incredible should XX produce per with more enough to and million an teams ended than tests of capacity testing. rapidly pace, our scaled level need week, production that customers at we quarter the

the EUA an to ramped our of a instruments collect to consumables, authorization we ramp workflow. The specimen testing the getting team expanded from of of to X, teams. and to or Food on is designed collection did exact media these for EUA COVID-XX to environment. in swabs, In out ensure help. six sample industry's manufactured an challenge, this transport we given in field about and be and into and more need. for these Kansas a understanding received July COVID-XX and in huge complexity on and meeting while for enormous of worked the a allowed reagents of vials Administration our COVID, in in specialized or provides customers ambitious vials of new accomplishment very the to services of aseptic power to was more date for testing with Whether Our overwhelming and U.S. other to with testing must use transport the exciting them to project our testing. in effectively Lenexa options built up run job the VTM We all industry-leading production the short lab our significant set to this period enablers and VTM, our regulatory address related results, projects at specialists managing PCR The or first government up system critical and help VTM milestones provided our facility flexibility the time, also in the the a needed such accuracy was us The test achieving produced key customers viral the were and and Drug our new scale vials application that significantly remarkable business ramp-up it May, This address media Lenexa, processing. our in And factory tests highly dispensed of came we for PPI greater demand. supply strain requirements. emergency weeks, The plan. of a we demand all materials. which created U.S.

determines TaqPath serological launch And doctors patient flu panel our Looking processes these has make And disease. can plan developing We're help a if regulatory we're We're through to which in addition, panel exposed forward, kit, determine person been customers as tests this a a has globally. a whether of to virus. tests. infection, the working the season. respiratory available test the to to to in developing of or we active has launching both COVID-XX a addition patient goal on is an to respiratory different ever our additional PCR-based that tell if

to our biotech and The aspect and involvement therapeutics ways other doing in pharma we're the launch the significant to customers support work COVID-XX our of is vaccines.

and playing a by a to products we're leader market services as in network currently Biomedical providing vaccines, Advanced example, our critical to role some and customers Research and and expertise projects, capacity to new in and leveraging governments patients. pandemic the U.S. therapies they by and clinical working XXX of give the projects government's through these get production ultimately To undergoing including we're development program, key managed And trials, other countermeasure know, are business. pharma you one high Authority, on to our BARDA. the you than Development our the for we're We funding human vaccine injectables, fill doses. support of expansion known global We're a used COVID-related that accelerate capacity can As antivirals sterile support manufacturing received to globally. which as be of better to volume more

customers for demand. are surge capacity in developing the antivirals who we're meet addition, compress timelines promising COVID-XX to In expanding therapies, expected including to

of our is support meet another expanding the conditions. increase site of deliver we a building from production to in services treating examples continue us While demand medicines globally the capacity double serious critical Plainville, our in the manufacturing ensure range pharma highlight we're of that can in our to response, will that also for we quarter. pandemic viral One we're series of health is essentially two I'll development the U.S. vector and new which capacity. will This for help gene expansions therapies. Massachusetts, the our

with The company biologics. other to meet strategic development biotech CSL, the high help partnership demand global is our to for

Switzerland, over take portfolio Lengnau, completed state-of-the-art expected highly clinical entire its CSL's packaging bioproduction under is trials. This will flexible We a construction by facility plan to be including the of our and stainless biologics to product our feature we site And number long-term leveraging which steel under in support technologies, also production, agreement, and a network, single-use currently support development, CSL's will is will expand customers. use XXXX. high-volume to in and drug just and both,

for ensure will scale. value investments we deliver our powerful a combination biotech proposition customers strategic of expertise, through can and that and pharma these of flexibility All on

Turning make pending comments now a to acquisition of couple capital Qiagen. deployment, of I'll on

release aspects we announced acquisition we As in renegotiated agreement. press you certain Thursday, last of our saw that our

pandemic and in is our global announced the in we the per of about full current industry offerings in March, significant we our changes needs. response, and to health help returns excited emerging business new transaction of the reflects to ongoing generating we fight diseases considerable of a believe customers since the both Given all-cash €XX this the dynamics our originally We look the offer. infectious other environment, together strong very sets fair combat our pandemic while forward contribution the offer shareholders. for transaction. to value revised Qiagen share, bringing We're and and making early complementary

than we returns strong our will For be shareholders, we in believe accretion articulated what favorable more expect the that and early March. slightly

is the expect half the still have excited process new the over with first the on our the to work opportunities of an next in is complete months, close. there While we're XXXX. regulatory of excellent done to track much and we'll following about several Company, transaction fit be for Qiagen we're the and

on Now, guidance. I'll make a quick comment

guidance due the pandemic we know, you around to potential impact in its the April As on withdrew uncertainty our customers. annual and early XXXX our

Now, late a want annual Stephen color here we're uncertain expectations while the organic and current our to on remarks, much for the as we quarter. growth to in key are his reinstate we assumptions possible ready in provide expectations specifics still with July, very time. QX. including our guidance, not and as review you it's obviously QX, will Similar for to

pandemic respond few huge the with We're impact turn call to on society. our a in to I helping the customers takeaways. you me a Before to making and leave playing significant role let a Stephen,

time for brighter this mitigate create to well the growth and Our to call are the over our future. through I'll strategy even the very managing now our to continuing an We're to hand unprecedented new business Stephen? headwinds CFO, opportunities. Williamson. With Stephen Thermo position execute Fisher that, teams

Stephen Williamson

performance. Thanks, I'll everyone. framing good and our begin QX growth morning, organic Marc, by

XX%. As and grew Marc quarter we outstanding had organically mentioned, we an

break to elements. the best growth I is think, it two into

that business, well from headwinds the and and we is growth, the first generated COVID-XX-related from business, share performance during of the scale market The our our speed the is of The COVID-XX delivered including tailwinds The quarter. result of team of and The as the the revenue really second the quarter; at end customers is COVID-XX just excluding were of the our in the the all rest and range duration largely the the up we as of our we our able well tailwinds the QX. that or by gain of of growth driven approximately in expectations we rest significantly high than scale our activity. $X.X instruments. billion offerings top-line by response for growth testing-related stronger to customers. the originally and We driven to outstanding were caused XX% initial increased pandemic, quarter. the The tailwinds that ramp quarter, throughout which the by were relevant customer estimate extend and the kits COVID-XX about expected, of serve tailwinds disruptions performed executed to to

We and invest economic growth headwinds while excellent significant that the are future. translate with and to able manage very maximizing line continuing the top during of opportunities bright a period effectively the for to appropriately line bottom growth. the into tailwind strongest Company managed businesses We really disruption

All of details XX% then adjusted color to an results results. and operating some adjusted of in us XX% some growth second for the more you around overall. in on quarter excellent the I'll income with share, Starting deliver our earnings give growth guidance. per with comments enabled some Company, four now quarter our conclude this QX and earnings segments total provide

As XX% press $X.XX, you EPS our grew from QX adjusted GAAP saw in in last was EPS X% quarter up the $X.XX; we release, year. to

On XX% revenue the the QX foreign our of top exchange growth our line, QX revenue year-over-year. XX% headwind components reported increase and The X%. approximately of included organic grew reported

geography the and the our Pacific the Europe XX%, in grew was China to growth quarter. Asia during North the XX%. grew approximately America grew Rest down Turning flat World high by with of teens, XX%,

including the XXX saw business COVID-XX. QX from at volume operating appropriate cost productivity continued points XX% and QX improvements investments positive given income We operational strong than last XX%, system, margin our -- contributions, adjusted driven performance. headwinds was and basis PPI increased very mix Looking our higher adjusted operating business controls, by year.

from The which business, revenue, just $XX Pathology million the negligible was approximately on quarter the in on This in continued to Anatomical divestiture year-over-year of we impact the investments was XXXX. operating approximately quarter divestiture of was adjusted margin. strategic the $XX and a we the businesses. QX income $X.XX last quarter, of at and impact the of a diluted sold the end million on our During make headwind adjusted operating

basis the Total factors XXX XX.X%, of margin the same the adjusted prior expansion in quarter basis Gross Moving was year. at on from points Company came gross up P&L. the operating to at adjusted revenue, details XX by our QX R&D an was came our SG&A of Adjusted the driven percent was as in margin revenue of And R&D of revenue. X.X% points in in as XX.X% expansion. a margin expense of Total XXXX. the versus QX increase QX in manufacturing quarter of X.X%.

at Looking the our results for below the line quarter.

last million, Our QX other was net similar $X income expense $XXX million, expense net income and the higher $XX than XXXX. QX year. quarter interest million of Adjusted to was in

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

ended Qiagen for approximately $XX the debt million billion the in acquisition. announced increase total and dividend flow through cash reflects totaling first $X.X cash and quarter. returned we the the was with approximately cash balance strong after of XX% in billion operations $X.X February. $X.X free year, sheet. continuing flow billion to as financing prepare half This approximately of the We expenditures dividends We $XXX billion the the to we of shareholders was very $XX.X in million. the and Cash from Turning net quarter flow of capital deducting in

senior During of the raised euro-denominated quarter, through billion the we €X.X issuance notes.

to to points as ROIC And and up at quarter net times comments year, debt from was leverage returns. our Company very of was XX.X%, XXX end a basis. on X.X EBITDA X.X up continue performance. basis Our last on we strong the generate times gross QX ratio total Adjusted wrapping my adjusted debt the

from reflected standpoint related of a approximately include now, prove instruments testing the segment three segments. comments in shows Diagnostics and meet couple here in time. go on are color with businesses. This in at Specialty genetic sample The to of our four That the includes The Life recognized thought our biosciences and quarters So, of Solutions. helpful the the framing impact around clinical the is results. COVID-XX that sciences revenue our QX, customers start the molecular I’ll to of Sciences of some From it'd needs into complexity diagnostics revenue and this critical business I response segments the performance preparations. of breadth business testing controls tailwinds the kits, be our kits. a

the We as microbiology and PPE revenue Products also segment also Laboratory recognized well by includes healthcare taking sales The channels. in market sales business, market of research and sales of from Services viral the PPEs transport tests the and recorded as channel. of media and

tailwinds in Those segments. were margins headwinds so headwind. not the investments. performance. the reported tailwinds and of investments our Company, on our COVID-XX-related services those given where recognition, compensation R&D to a net and the time, as includes in continued production commercial, a In on segments. testing business, as revenue COVID-XX levels impact even by match of our and in of each investments during in does lab the plastics pharma and COVID-XX appropriately capability and strength colleagues workflow-related same headwinds, skew standpoint, cost the had our The the mix. and of This From businesses, a products segment. make Across Company's environment, addition, of made support impact in well given mix uncertain our segment, the through across varied the as revenue therapy At investments incentive strategic able do business the well We of the vaccine system in was impact segment that in to margin this with positive we was overall business. that development quarter, do and the manage some different to this depended production terms as and necessarily PPI the the revenue we that pull included used from each

really us positioning Company, times active for to through parts unprecedented management the moving from So, standpoint a all the segment of well navigate allowing us a and reflective of very of future. but successfully lot

exceptionally adjusted starting with in Analytical decrease Sciences the to detail, customers revenue driven sciences So, to PPI this organic growth a operating mentioned saw continued business that down well moving offset bioproduction points by in headwinds, organic strong activities, the our segment in segment on driven In and QX, reported revenue Instruments Analytical XX.X%, and as I margin income in biosciences XX.X%, XX%. positive in this Life Sciences QX segment. which year-over-year. investments productivity make QX Solutions XX% of drove businesses. segment. and to The mix the basis up disruption reported margin XXX% volume strategic points than strategic earlier. decline our was In productivity operating to quarter, strong a quarter, the the Instruments business percentage adjusted and strong In investments mix revenue XX% revenue genetic XX very significant XX%, have and in was to XXX was of business increased and across operating impact adjusted Life adjusted and QX very more Solutions. continues operating and significant we as was growth XX% by income increased decreased segment COVID-XX pull-through year-over-year. as the volume growth our by strong continued business we in a

Turning Diagnostics segments. to the Specialty

growth pathology was XX%. business, previously QX, As In increased included segment we a that the in reminder, year. June organic by the last anatomical is revenue reported X%, sold which this revenue

quarter. clinical businesses. was in strong the businesses growth Most from said, In volume healthcare leverage a in a and prior Adjusted in year. income in headwind operating X% decrease quarter. XXX XX%, COVID-XX-related related We segment Some points in we was doctor by significantly this tailwinds the our transplant diagnostics the a immunodiagnostics the the were of result productivity. segment the COVID-XX-related which as market of businesses. also Adjusted from testing. saw This and operating headwinds were visits microbiology quarter, strong the significant included this XX.X%, decreased a saw impacted down our basis in That channel and diagnostics very impacted divestiture. and saw margin

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

segment for pharma revenue growth which volume XXX Services segments, increased our operating the segment operating services. the decreased XX% points. than a prior organic basis leverage. Adjusted the In XX.X%, Finally, lower within in year in by QX by Laboratory quarter, we the saw Products was adjusted reported X%. quarter, the and margin and was was and strong and QX In led growth X% was income productivity

So, and this the more business by offset mentioned was investments mix that unfavorable I than strategic earlier.

guidance. related COVID-XX impact not detailed And year to to to provide Turning a The evolve. customer continues and result, guidance. in pandemic still we're full a position as

with modeling. I last assumptions organic However, certain growth quarter, as did on help your will well viewing quarter color we we're as you you coming full XXXX in provide some as I'll the start how to organic for year with growth.

and play is will to factors the the below quarter. QX. consider approximately Our outline the for about current of potential could that the out growth I are thinking estimate both coming above growth XX% XX%. There potential organic outcomes, our of most likely QX outcome when for in

variables last case quarter, QX. in the growth was drive key As that two there our are would

is headwind our the caused activity. customers’ to scale is second the revenue first the by disruption COVID-XX-related COVID-XX-related The tailwinds; the of

clearly of volume current tailwinds Regarding growth. our revenue of QX. of estimate translate under factor, wide revenue, our of will the there the revenue testing customers significant of is outcome tailwinds, outcomes here. a the just determining most would in But, approximately of COVID-XX The undertaken be our for XX% to most range $X.X expense the QX by likely which is billion

compares in quarter-over-quarter in the which QX. in our of revenue will driven to a underlying is our by gradual This is and market this improvement growth, of estimate The X% range approximately activity. customer the headwinds, QX. of rest assumed flat share combination ramp the Regarding to in growth, we COVID-XX-related be an gain negative negative XX% activity,

the return to note more the to to workplace. at height the As seen pandemic. they lockdowns anticipate the not that fully important return range It's to does the of

So, QX when organic you mentioned XX%. growth best put our as all approximately estimate current I is this together, of

FX, play could some situation, year. outcomes, for fluidity there now to potential Given I assuming million of in Anatomical under which business, Pathology million, from below in of sale respectively. and that reflects factor. now an swing and modeling on is above the just XX% $XXX $XXX full or of most dilution to testing out update revenue will the demand of headwind million With the $X.XX $XX that operating income the the the this and being we’re There's move XXXX, elements both the of are QX regards on X%. a with significant revenue headwinds year-over-year the of of

assume $XXX completed to we million XXXX will contribute to in the in our that growth XXXX. reported acquisitions continuing revenue We’re approximately

QX As it reminder, one in there less this day calendar, in will the year. QX days extra be two and on was a

We million. net to share. $X.XX $XXX million includes XXXX, or year per to interest In that expect a approximately $XX continue to the earnings completed of to-date. cost Qiagen for equates This acquisition the pre-funding to be cost adjusted

remainder to continue XXXX. opportunities will more transaction of look at to of prefund the We during the

expect expenditure $X.X We net in capital regards $X.X $XXX the about income includes now expenditures, billion And assume the continue be support net with to that we million approximately to to adjusted range to year. This our capital other COVID-XX million response. of will of for $XX to be billion.

assume million XXX year remainder year buybacks this count that dividends. capital we through to deployment, share continue of in are capital shareholders will full We to between return estimate diluted million of XXX of terms and And billion no the completed shares. we’ll and $XXX for be million share in assuming further In buybacks QX approximately we XXXX. that $X.X average

to see in So environment. outstanding QX, back call from turn to With dynamic manage we I'll wrap as a the over extremely to can the effectively our Company continue performance Ken. very that up, you in

Kenneth Apicerno

to open ready it Q&A. we're up Operator, Stephen. Thanks, for

Operator

first Tycho from the from Instructions] Morgan. Peterson JP comes [Operator line Your question of

Your line is open.

Tycho Peterson

quarter. on Congrats COVID quantifying appreciate thanks. the kind tailwinds. guys I the Hey, you of

I You instruments. think, look little out on a other as durability we the test further approved now market, you PCR testing the COVID think the securities noted about of and is the how bit side?

panel. respiratory the about talked You

physician the a And that move example, Thanks. panel? for So, it can systems, you market? a talk more out you forward build is office about little the rolling into automated syndromic of bit do need into panel to a more

Marc Casper

for Yes. question. Tycho, thanks the

impact is And, in it QX But other to what been at services net As pharma largest leading level. U.S. the the certainly, forward fairly U.S. of and support look a of COVID-XX the That to going demand. has our Europe, ramp as going demand ramp-up impact Around that lower certainly the weakening for have and the into the development we're PCR expecting I business the impact activities at to strong we see for capacity. saw forward, what have in by a change. QX but world, to I When what but headlines, we we response see the us demand up the generally And and XXXX, to and is QX. platform. significant going position to up, in we continue obviously you very we in testing picking is in in you a will therapy most our to see a you be of determinant larger obviously very anticipate vaccine year this the larger further the revenues look get related of or may And dominated that do demand COVID we be is get COVID you also testing, you're in very of as saw some demand going now. -- similar are in QX. geographies.

Tycho Peterson

Okay. And then, Patheon. follow-ups two on

about versus we should press couple next for You on expectations? the think Obviously, your trial you the to XXX you've release the the path development that on China with And programs involved us about delay XX%, the with. just for on quantifying you're other separately How had headwinds the in Can vaccine the out day tailwinds then, recovery. of was think been Patheon? down line trajectory quarters? help

that little was worse So, than a these models? bit Thanks.

Marc Casper

Yes.

COVID, services to in there think the a some, of And where demand that And involved trials, institutions. were. very is, the pharma was was academic level, conservative in number the terms from clinical very, look we're when of sort the So, the headwinds we a high large but way on China quarter, when meaningful. I opening we throughout look up of outside I build China at about of saw on would not very I with at pandemic the programs. of And of terms very activity, the

up was back It more it's that would you, So, have picking in than actually to Tycho. But, muted encouraging. Thank April. a QX. bit little expected looks in be what we more

Tycho Peterson

Okay. Thanks.

Operator

Evercore. line Your Kumar next from Vijay of the from comes question

Your line is open.

Vijay Kumar

for point, Maybe to the could for follow up understand, perhaps I'm over industry? you figure a given larger size thinking, than diagnostics vaccine mean opportunity? of can on the industry. that perhaps the science the life We've the should opportunity curious -- I prior question. could Marc, multibillion we’re drop off. on just vaccine time at what the dollar the heard diagnostic scale overall just some opportunity be

Marc Casper

Thermo that role, leads wide successful read of we vaccine that, what's strategy the what's Fisher little generally a on are massively produced? the there very So, we countries been of ramp-up the going the a I'm range company the about talking every a projects you ultimately more vaccine under We've high-risk is the the to very-active be vaccine, total vaccine Are What billion And and like used what more people going world? a to that think about significant outcomes the a I would the thinking vaccine? of to getting be thinking thinking of what's the expect, to can would will just getting bit those When the world or we high-profile afford many CDMO the around a projects population, that hard in play about be be I based and a scenario quantify role about. is fact dramatic. about the should opportunity, amount that certainly industry vaccine, X are.

or what a substance the form in materials administered. very having cases, production business and raw fill-finish role meaningful providing would call in either or a of certain from are our drug a We with I'll ultimately be to vaccine bioproduction substance sterile that packaging final the biosciences roles vaccine certainly in

over slowly of is more already ramp gotten tailwind successful. and we a successful be vaccine the it year should be meaningful and XXXX-XXXX balance we've the through vaccine So, will be that would little a this in meaningful if expect time bit with of revenue a that

Vijay Kumar

one And margin, the half. back for in on Understood. the guidance then,

guys pretty outcome. organization the perhaps prepped drastic was you mentioned, up a think, I for

you clearly, So, outsized had volume benefits.

the we about diagnostics about have why we be incremental for a perhaps curious margins of little in floor, spend So, tempering bit? assume QX think an some don't to I'm all back tailwinds. when should of you the perhaps back that even coming think EPS the And down we half, if incremental maybe margins,

the here pretty Thank seems EPS be still it strong. projections should So, you.

Stephen Williamson

Yes.

So, one. take Vijay, that I'll

So, growth XX% adjusted when you organic in think QX, about EPS. XX% growth drove

a very it's So, strong performance.

right EPS drive on So and well. based outcome we’re XX% adjusted very that what you think thinking now organic growth would and likely as about is QX, most strong

way QX. to think business for QX of to out the in good the favorable mix to could about the that's the scenario think think of to good I this XX%. likely about place, change It's in be Obviously, revenue. slightly QX, mix I a that modeling versus within but business the that kind is a less better, mix where play XX%

Vijay Kumar

the be away we that in assumption then, I all should year? just the double-digit on now in perhaps perhaps, mid-teens. flow like feel the for range certainly diagnostics And reasonable if QX, a Is for the went for assume year, EPS even of EPS the

Marc Casper

would a number not wide. segment, to the enormously give you we about full when think guidance give be in potential growth the raise be each would year So, mix and to that chose because range useful, the of

what very we into get looks what like, could world as scenario. we looks predictability more QX a are don't where especially know you you like, looking have in what bullish So, the at the is, virus

could pessimistic actually scenario, worse, was there if -- much wave could you be current a dramatic You gets a have this more pessimistic.

be at next growth approach I to create got we're of extraordinary the question outline QX de managing feel us, good outstanding an we're thinking share a gains, and from Derik external Operator America. think our and what going performance. our the about through keeping So, it'll QX. whatever And going deliver drive for to you've to Bruin from great line environment from our is Bank earnings right top-line comes of thrown We Your sense opportunities financially year is. we're on performance,

open. is line Your

Derik de Bruin

everyone. morning, Good Hi.

a of So, questions. couple

one I think first the is, appreciate color on the I QX.

going our filed questions then we I you the tailwinds mean, ‘XX? in do investors incoming has morning. I about we're put on going double-digit about it's down, for we sort Because at decline of that's where of think, this growth but out COVID think talking But, if I that. given modeling getting you production do -- numbers, XXXX coming into about testing for I Qiagen commentary, this? documents about where in bulk from incoming questions how their most look of is could of people. up the if guess, think I talk obviously business, we know testing just that like ‘XX, my are vaccine sort how think the you

Marc Casper

the Derik, So, for question. thanks

tell that way. feels know as But, it's month we're Let how these probably from for the world. in everything progress a if far impossible making continues time you me quarters. and the these as we're to the the to like certain with It that of -- therapies expecting going be a are successful. is what we be It'll days. to in planning. we're That's living will predict around number a in for market countries that it's many again spread a time take pandemic vaccine Well, virus take to

volumes XX exquisite role a for enormous April. range million customers. astonishing. that very produce to very So, what the related been and that of quickly and And We system also response whatever be we're outcomes. play think well-positioned, think ability and number have feel And is our demand by of scalability week. to very, that continued that will that we’ll be, disruptions end in societal our And this confident I power capacity to very our you headwinds be the manufacturing quality, a them the of kits highly mean at customer has therefore, going selling if is some are that the our any installed done XXXX And by a relationships. that business the the about that end and scenario. because ebb meaningful we And through House that. expecting manufacturing teams incredibly of our testing scale out but is way about meet XXXX, good was sort our the is we're to was remarkable working And but manufacturing both, base that. is and needed needed large we're not on a, late there, response of that. of at April, it's the we're we in flow, able said And navigating doesn't back, of based PPI pandemic, White will But quarter, when to I to been feel

Derik de Bruin

are, your customers to think of open. are and to just we as through color. sense Can many government and -- bit are general you tied colleges. I APAC still about talk of your about academic walk you've labs little planning deal big business get chunk this how the going and lot how academic more uncertainty academic how you you on fairly what mean, to some these labs got of look closed? a your clearly university with us a outlook? could to U.S, at And Europe, And there's a a resurgence I Great. and Just and

the I have the other big from question we other one -- investors. think incoming that's that's number

Marc Casper

Yes.

with activity government in pandemic the very at of So, academic the terms disruptions end market, down. you obviously quickly around of and saw the ramping world beginning

little anticipated. you throughout faced the than the was than but slightly actually activity steadily anticipate one well, at picking closed actually for activity with one actually The most of as up. a Europe more the trajectory later is of would picking That kept most pandemic country U.S. would -- strengthen of been the bit has which same which The look Western up Europe, started to behind, As its quarter. really on have type China, a interesting slowly little is -- but universities quarter.

receive as normal. able as to that of impact instruments weren’t the easily obviously, So is they customers

customers instruments expect would setting, we well. start as that up academic and you'll see so, in And pick government as demand that reopen to

Derik de Bruin

Great. into you. back I'll Thank get

Marc Casper

you. Thank

Operator

Nephron. line question Jack of next comes from the Meehan from Your

is open. Your line

Jack Meehan

Good you. Thank morning.

Marc Casper

Good morning.

Jack Meehan

right given more seeing in business view. think tailwind was just a when get take difficult permanent parts, how And over to seeing your the it's all going we're you're and share to kind the year to think of be much outsized on how versus that you're ago? do I a X% to right up But year you know the versus X% you gains moving provide curious target we the the out don't Marc, benefit end view to time Do proving three-year a position you I have one your now? laid now.

Marc Casper

Yes.

view, X% team’s support and hopefully when increase Company colleagues and taking term. outlook environment. this was at the Normal of your brighter right, the obvious. principles, customers manage safe, appropriately to right, team's us for when we've be your a activity, going and third came the what sitting X% an the in view was Company And China, the Keep to having for growth which and a even Jack, be of view manage actions future. the tightly is, demand, growth, the a clear costs the which is is to the clear very even because longer So February Company we we with in were strengthen in set looking to brighter course, situation there's solidify aggressive and of create to future meant, guiding of for that very position the to disruption but been very

taking an no to the help a or navigate of But normal know range that midst have when I strengthen customers idea pandemic, obviously as in that strong the And our been So, in aggressively we're we've above so able environment well. actions we to need to Company. we're the higher the to outlook long-term respond get you're now. we year range. of the incredibly because And in

so So, as the at this the look very could at range. performance. point, growth of at end year when about organic well terms normal had with -- we we're of be our this significant half, obviously X% QX, high a And in you obviously first the

Jack Meehan

There I on increase. enough. whether the is Qiagen. €XX questions I then, to And Clearly price follow times, Okay. around also justification appreciate unprecedented for up the can wanted so some have been

on appetite walk just next your I raise was you hoping could And what to the further? tender through thereof So, lack the process. us price happens comment in just or

Marc Casper

Yes.

for thanks question. the Jack, So,

our the disciplined very and everybody stepping in and the we're generate job of that and a we with in Qiagen to shareholders. knows, good our thought extraordinarily the done we dynamics €XX. ensuring terms value. came strengthen strategically a returns March pandemic And As way of said, to the Company And deploy now. you capital, of real And response. strategy very through has an here to impact and our beginning at we're a different, and we agreement our making that on from negotiations terms deployment up The strong from fair full are society capital where for going had believe as Qiagen good and obviously, that's

think Germany. mechanism XXth. of period around process, terms in we view and final the and complete, very And disclosed is we over, ends process the And the and we regulations. get I because offer. because believe is straightforward. In that our morning, of in if clear off XX.XX%, threshold, is early is, proceeds. best were cooling And to don't deal if clear then tender hours very this so the German That The XX.XX% we August tender there's is a the the I deal the our

regulatory to of moving it's into welcoming shareholders. the offer. revised we sets is. over for Company. both That through next the forward forward new completing it And, tender and appropriate colleagues what process And no is think is we and there So, X,XXX look very year process the then

Jack Meehan

Marc. Makes sense. Thanks

Operator

of the Schenkel Your line from next comes from Doug question Cowen.

Your line is open.

Doug Schenkel

taking thanks the your questions. for all Thanks months. several my And the to again, morning. over efforts for Good Hey. Thermo team past

what are market COVID-XX of end expectations into terms your first question, tailwinds? QX excluding in my financial targets, Just embedded

Marc Casper

way quite, It's manage the Doug. a business that we not

me an levels views some activity answer more around about and the get Let in you qualitative it. non-COVID, try to make

Doug, of where businesses better XX%, So, which X%. guidance about right? ended. declined So, right, it end June was our down for expectations just the the above related in the gave QX that non-COVID what process, we was that's

normal to negative is impacted look five. The business, negative we worse. at would saw, is The that has at a be the QX when five, for have for about flat, that was businesses, negative X% points articulated the range improvement was flat below to us outcomes is what on So, seven experienced quarter pharma least to the non-COVID-related assumed. last continued increase biotech years, right? steady is in And it's what activity and and the quarter least you the about start level government, diagnostics, they it. up and would of some throughout and likely X to see step industrial and impacted, way flat. steady still growth you right? that would the academic applied, Stephen we throughout X healthcare, the assume quarter. that is be think in think a quarter. the range I of should when April, all in X basically X% June to outlook X in would of the And throughout So, June the that were on about even you continues what May saw a for So, The you're

Doug Schenkel

helpful. willing to or Marc. those you you That's you your Okay. consumable super versus touched think, the there, quarter commented be any don't I rates. on in instrument revenue thing building And exit of off details remarks the in Would prepared on on data? share growth one

Stephen Williamson

Yes. right very they're about tailwinds. the tailwinds at to think That was now. you skewed be going consumables large, When by

a been at were half in relatively Customer growth than up pick low. consumables lower year. the we of purchases that second and instrument of expect to services. clearly I level that, activity the Excluding has And

Doug Schenkel

a more U.S. cost. building to questions, per above at I off per but that I rule about for Thermo, Thermo component And just use Is for cost morning has whether using a typically Glaxo little what on of of vaccine, Okay. at which that just of pricing granular. as agreed be earlier normally their [ph] their the just much $XX.XX thumb some unit a vaccines XX.XX there to is think going of smidge talked range, selling services? unit to to up really of one sell using XX is, a mean, would we cost? unit basis per on or last up $XX for a unit, get end how around it's percentage vaccine can one, trying in of would Difficulty]. Pfizer words to grab this [Technical about which

Marc Casper

It's to extraordinarily really different do.

I why an you, which you Let me can't is give answer. for just visualize it really

of If units give vaccine vaccine, in gets XX you a another is views think vial meaning it the can about unit, single vial, put of vaccine you single thing. One where is two out vaccine; doses in the how administered you XX syringe and the have one cases. I the different take and a you those one or

You're get wildly CDMO revenue filling strategy different just going the revenue even based those on to of or companies. our

So, to of thumb technology do And, you very is in exactly so what's forth. hard dosage used a until know the form vaccine. the the -- it rule and

Operator

question from Leerink. line from the next Souda comes Puneet Your of SVB

open. line Your is

Puneet Souda

thanks vaccines. testing for commitment to here your And and lives on with the Yes. Hi. quarter commitment improving and impressive sure. Thanks And research the quarter congrats Marc. to and COVID for here both,

thinking you your long-term before? benefits to on is out? than and COVID vaccines capital actually growth deployment, first given about you're the see you given deployment as if from could multiyear, one, differently I So, that pointed on you on capital the ask thinking, testing any what capital deployment, vaccines, expect Are is thinking seeing the scenario

Marc Casper

So, Puneet, thanks the for question.

too capital the a the and changes business. to it from M&A being capital it's of blend say deployment a into I longer would is, be don't What really think strategy, redeployed going of the much. return So, over period majority I time, in

larger acquisition and about If with in which capital. return I past And of steady forward, facility. large next acquisition, over cadence obviously announced March us the of in a we a biologics deals CSL’s also you'll bolt-on Qiagen, or you quarter smaller will close and time do see nice year think think, a a

is a So, performing high at our business level.

And is able future cash that high be to us perform the flow substantial a that's to for going to going it's expectations give level. to at Our very redeploy.

Stephen Williamson

the capability also And as enhancements CapEx we’ve to capacity for significantly response and address that increased COVID-XX Yes. well.

Puneet Souda

Okay. and And and and is my you have Thermo's the pointed Marc second to. question global a given That's the unique very perspective, a scale out point, speed on, that position you helpful. vantage

is relates likely you sense look here to funding that that, funding what you the research us you're at But, expectation Magnitude at unknown given is As there's for more this when a academic funding research across point. an of seeing, across to globe, grow. research globe? give the could it industry? given Thermo, of science the the magnitude years life this And the the What crisis? this for five across does importantly next and funding tools mean

Marc Casper

Puneet, So, question. thanks for the

customers and So, infrastructure this the of work. perform My systems dust settles, the in of strong and characteristics some our well as going to to excitement commitment expectation than what we great you of that the talk importance environment. early the is time seeing science to be is when it's our a experience, we in we're to even see period industry life healthcare capabilities, better the life pharma research, over the talk enjoyed. we service with diagnostics market the tools our we fantastic growth and use governments and science industry And

will economy strong And the so, that of to there's long I flows term we’ve affordability our I'm position perspective, to serve But, holds Obviously, and benefit very what think the those industry. the because and in bullish about and competitive what very the going long-term optimistic industry be be. if things. I'm and that ebbs built for for

Puneet Souda

Great, thank you.

Kenneth Apicerno

just more. time for we Operator, have one

Operator

the comes from Steve Research. Beuchaw from question Wolfe Your last line of

Your is line open.

Steve Beuchaw

morning. here. Marc, on Stephen. reasonably the of subcategories the think space of speak as for material people It heard, there yields for couple immunity. is number frequency testing of on there kind think initially. financials as prospectively testing of have about that are me two-parter for could then, finding you a hoped Thanks the and testing Hi. what One extent question leg of the to to a antibody I for you well and example, whether a to be have Serology your tailwind? not seem you letting signal as for plan, anchor for hoped just in could did a of it I one asymptomatic drivers serology. And couple quite within Marc run actually campuses. if Good to And is I just second ways we to had asymptomatic testing. screening speak potential screening. relates wonder universities the of higher? We've high how then, or talk you relates as be my broadly. a we part instances Can Are you doesn't in many of the as for market there we get evolves? could is

Marc Casper

Yes.

So, Steve, thanks for the question.

school. We see the what a patients, to expect And increasing life back a play would role we cases. a work, asymptomatic to of or level interest activity, in screening of use terms In different with that. that's say dramatically type back to we number many is

in that up embedded And a take strategy. not some ramp so demand And platform, different as is my methodology facilitate asymptomatic time the that of QX. of but is over some the screening, that in things that could on forth is and the like pooling

assay. that the think On serology, We're tailwind through activity time support a to over developing testing it relevant. we're taking the its our will regulatory while create process. I So,

testing becomes the better the means, understands more As it serological community relevant. response what medical or immune

there's capacity tests. it, supply. need to bringing we'll quality able And as customers We're And high so there. right be a out out now,

do You wrap. We should quickly. one have question for Stephen

Steve Beuchaw

any quick expenses like, commentary that other things real you've think Stephen. One T&E lower put around much. virtual you that or cost identified question Thanks just being you sustainable? Can so for from are savings from

Stephen Williamson

Yes.

time. that to are and clearly, going I So about we and are effectively invested lower, dramatically thinking Company in how for the long-term, T&E a expenses managing live the learning control costs over taking we're be since we environment. to the we've And in that’s advantage different technologies very all of think

level that it’s get guess a is to you hundred couple So, ongoing probably of million my of dollars time over that costs. saving of

think So, we're both, I the appropriately opportunities. managing long-term the and short-term Company

Marc Casper

challenging So, today. customers we're time. this on during joining forward an role to updating safe. leader. industry And to for have ongoing the we'll wrap in everyone. to of helping here you quarter continue support going for hope proud us you an our And to to manage of stay delivered with We Thanks -- very that stronger period of Scientific. first, society. you a I progress, as pleased look our very We're exceptional thank and Fisher Company our come your Thermo and even you always, appropriately thank out We're

Operator

call. today's conference concludes This

disconnect. now may You

Thermo Fisher Scientific (TMO) 22 Jul 202020 Q2 Earnings call transcript