TMO - Earnings call transcript Q3 2020 | Thermo Fisher Scientific Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2020 Third 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. your begin may you call. Apicerno,

Kenneth Apicerno

thank Good joining for morning and us. you

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

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

not non-GAAP press this forward-looking representing estimates our as change. any site do to we Information. of is even our prepared While statements comparable quarter date you some in our in Accepted views the XXXX to heading be during obligation earnings, the specifically call, should measures reconciliation we GAAP. or Also, under A at future, in in disclaim point elect not referring Accounting any release the rely our of so, statements available may measures the directly Web to GAAP today. of the Generally with of measures forward-looking these section Principles we'll and to financial also accordance these if subsequent to as on financial certain Therefore most third Investors Financial update

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

Marc Casper

Thanks, Thank Ken, and good third for morning XXXX us for call. our you joining everyone. today quarter

later work today efforts and and for that a we're But to give can be supply our focus development having also we Fisher on globally. that doing it's period the this customers. worth well, vaccines industry valuable is We're give for We'll that to We're positive seeing future repeating. healthcare diagnostics examples A from our healthcare. our see during few more a referenced you us for Funding our trends therapies of much in building recent clearly perspective, for for generating a chain QX on support of the incredible with performance and continue proud. at but stronger of to prepare growth. and stockpiles of continue examples on more note As seeing to I increase review as in release, build grow we you exceptional time, the they manage progress business, spotlight approximately effectively base these metrics. commitment again saw will financial to on our base by has on among our revenue all Not systems our performance health QX, humbled also in collaboration significant some across our to delivered globally. $X see led efforts our this this you all to our the the we this they call of be of through key From This I'll role of national response, COVID-XX and color as impact performance time. our the security environment to the financial through and continue customers put managed business. only in already help governments I'll a the and unprecedented to my will that many billion making profound impact important press what last trends for on COVID-XX-related partner speed as Thermo excellent future, improving the are research made leading first, society meeting greater we threats. did significant the team our of and a business we customers, quarter. a in At The to they number and need our scale work answer the but teams did strengthening are expand we're increase quarter. in exceptional work our to remarks, financial supporting analyst I same contributions our and Global return end our seeing to to markets. in world, very I

Our reported to to year-over-year $X.XX XX%, Adjusted billion. operating grew in income revenue XX% billion. increased QX $X.XX

expect over our capabilities Our to XX%, we company appropriately significantly the us, the exercising XX.X%, We're very adjusted to services, manage cost grew adjusted while the to new margin the $X.XX investing fluid value that continuing by create operating environment, quarter. and longer-term. per EPS in discipline products, that and from increased share will in in you'd a

increased. years, base further performance end was up more an customers of channel. services, low to strength end returned markets, the of excellent and of these COVID-XX as ramp growth end activities for and of with QX. pharma academic our bioproduction, opportunities strong we market to performed The the and in growing helping our In customers market, our market led biotech, safety XX%. these this vaccines. in by combination of to largest we development research captured very and we this the in four the QX, delivered work accelerated our well a pandemic-related many market our We've in end and government and and and return therapies digits to combination Turning significant to particularly all our and of business. pharma fundamentals biosciences, our response grew Starting growth businesses servicing activities markets, their across research single pandemic We

industrial improvement we meaningful Turning while we saw QX. low quarter, a Last, in an declined from delivering sequential quarter, digits and and the we the in applied, incredible XXX% single during growth. to had diagnostics healthcare,

Specialty QX of dynamics to related across testing our see we and of the of continue revenue and our improve level benefits saw COVID-related and businesses. grew Life Sciences levels routine quarter. visits significantly While these the demand a lower impact testing, from the did during doctor Diagnostics We Solutions

know, proprietary along diagnostic for COVID-XX as with kits includes well both instrumentation. here products as reagents As providing collection test our used sample involvement and you laboratory-developed tests,

amazing resulted QX, that deliver So, us the not effort in only in The year pandemic response also positions our returning growth. to put our our to an our increasing performance summary, the teams combination base but yet. in forth best business

in Turning pandemic, the critical businesses. across the worked our In increase partner executing while progress to quarter, the to address we making customers best for on our strengthen speed growth strategy our we so our and our our highlights business to scale for by needs the we QX, brought can at know, great position. capabilities with as you continue competitive

of highlights. cover a the Let few me

partner pandemic longer-term. important clearly while the a much to for value world. industry we're for terms far of so will has of governments this to year, expand driven this sustainable It's our In growth and place in continue our that note we now response, around role us trusted what exceptional as putting create

install Amplitude we've to testing sample providing help position solution, instruments, enable leading strong highest that you installation launched First, presence new expand our We're industry-leading our given community volumes. know, solutions up in laboratories kits in PCR-based capacity, we sites. is we TaqPath our PCR completed September, This and several return have In COVID-XX demand that standard and highly X new customer kit industry. ramp and the medical helps as our for solution to testing school. continue and automated by has of base work the scale quickly we QuantStudio seeing bringing the market throughput on innovative instruments, already the gold diagnostic tests and and society's this up and meet to the to test a at the based platform combo called

Phadia OmniPath of total detection the U.S. introduced XXX instrument be Thermo base as customers test our We Europe, antibody new well recently emergency qualitative Scientific EliA on and the countries extensive to is new and two as received run mark. test accepting use worldwide. in the the our our other tap ELISA tests into tests, Both install also antibodies, FDA CE used so can for from available can now authorization

the significantly We've for that our by scale preparation on opportunities instruments of disease and we're nine us a new the testing. forward. base increased create infectious long-term, recognized As player months, I last our and reflect PCR over going customers sample in as install now will

Asia-Pacific Another by our opening expand example plans live expand Development global capacity facility nucleotides collection. value business, Singapore value bioproduction, in position biosciences emergencies we we to want former our example position for viral our to across the QX, vaccines. great building of which an to specialized enzymes advantage continue will Board the meet the capacity We're a is media across us the announced and how in This will the production Kansas, and expanding we're sample them our services, to to pharma our vaccines. high-speed adding partnership increase to In facility, creating for to Scotland respond in in of new in operational in demand European creation a week global capacity our infrastructure with in investing of there. ability in great of effectively will support to of to line PPI manufacturing that therapies more region. such the further incredibly we make and is governments the capacity filling to customers' with last put to and help that well viral in Singapore used essential of businesses, of Once the of capacity We XXXX, new as In speed first facility and help the the supplies fill are demand media the that point meet in process, last business our highlighted and operations key up cost-effectively long-term transport as handling important a scale well, I facility our here with sustainable transport is biosciences, for working Economic growth. testing our example and system finish We're ramp building One future. significantly sustainable services to plastics new needs liquid that we're is used meet us market. the in support by and that significantly sterile future. announced our only also significantly lab surging viruses include and plastics is another drive health our quickly our our our quarter,

summary, giving work also it's our government-funded more capabilities than essential is U.S., committed In helping highlighted that therapies. to and capacity navigate all including meet project increase addition to to clearly $XXX global million and demand. to for to of our customers BARDA that meet vaccines be future add and last In us capacity capacity we in CapEx repurposed COVID-related this we've demand to the quarter, projects, new will the pandemic, in

growth I'll to response are from quarter. business. strategy our also While you we performance, continuing in significantly our few contributed to executing the across make just our a highlights the give great progress COVID-XX

innovation, a launched significant number in products new QX. we of terms In of

a pick me couple from bioproduction. one Let our one business microscopy from electron to highlight, and

of vaccines but new and also adoption cryo-EM, in and Thermo less than These biology our applications. and and Oligo another cryo-EM isolate X will Scientific not product what view previously mRNA scientists is new is This possible. to the POROS accelerate breakthrough structures allow research in used development for therapies. Selectris Thermo to time only new Filters the Scientific resin unprecedented advances of detail protein Imaging Our are was purify in filters structural which for accelerate

customer purification accelerates, continues be scale production our critical. demand. and of markets are needs mRNA highly our presence technology leading emerging In expanding we will advantage for the scalable meet As be to us, an to

the bio-production single the opening quarter a celebrated our technologies. new we Suzhou, for in of grand During use China, factory

increasing have already lab well-established our this region, products in for facility in biologics. Asia-Pacific and will demand expansion is we know, which bio-production you the meet first help there Suzhou, operation As a

progress I Our through we tied around value pandemic are business deliver teams want QX. in positioning the we while proposition. growth business highlight the to were growth, our last in our China part the for have effectively The is pleased and making China managed in XX% unique to to across

and in the forming a stepped very well. now healthcare new This Our challenging relationships. that navigate as build to with opportunities evident already and help on them is know, creating we as recognize customers to strong increasingly environment so major way our you and customers up in biotech diagnostic that's

During opportunities depth never this and longer the of scale time, gain advantage capabilities our will evident, been and of leading share more lead to this term. has

I'll comment Before capital I quick guidance, a our a make to turn deployment. on

know, As capital a returning buybacks our and through you strategy and strategic combination capital deployment dividends is of M&A.

to of pipeline. view have our terms deal continue an In active M&A, on we

the meet criteria a quiet have and as always, we'll creating very strong opportunities shareholder approach that disciplined We value. balance sheet, apply our for

our we year, grow obviously and base approximately on growth that $XX.XX but of we the to to and and QX. a full-year This there that continue XX% are also achieve context, With guidance, billion, grow in has share. truly spectacular performance combination to extraordinary expect to response year. well details, you Stephen to XX% track expect we give in expect our our led per been business. XXXX by executed to revenue will the we tremendous effort adjusted $XX.X by grow to to EPS full-year to we've this supporting to more Turning QX, XXXX and clearly, our COVID-XX

over I with of Before call Stephen, a the me turn leave you takeaways. couple to let

continue having to expand impact and leading our we society. pandemic, profound to responding role in are on We a the

gain drive across and growth market well very are share, opportunities, executing our businesses. capture new to We

year Stephen? I'll efforts our Williamson. With well us for that, strengthening the significantly call positioning long the very Our this and over to are hand term. CFO, company now Stephen our

Stephen Williamson

I'll and with our high begin good of everyone. Thanks, level QX Marc, a morning summary performance.

we break into exceptional mentioned, this and Marc quarter down organically another XX%. elements. grew As have two I'll

we of during the our that The base quarter, the first and COVID-XX the is business. second the the scale of generated is revenue response performance

third the COVID-XX billion response contributed products and testing revenue Our by XX% largely related $X in growth; to quarter instruments. was driven and

revenue X%. the business COVID-XX base grew excluding Our organically

was not our materialize. potential are We The level the XX-point driven higher as deliver from great organic analyst customer continue levels very around for to have customer for meeting, improvement quarter activity and pleased higher growth risks robust XX% commercial by we QX activity the than of and updated to recent a the execution. demand a testing, the did

on growth, the results results, cost in to $X.XX. leverage Our PPI conclude details guidance. business last some fixed our now a as with adjusted by some was QX earnings with speed around more from the mentioned to four provide segments XX% operating adjusted grew $X.XX a quarter EPS I and color year. in earnings third combination I'll Starting on comments organic then system at enabled on share of excellent quarter we GAAP the enabled XXX% with EPS pull and up our XX% QX truly exceptional through scale on us result. quarter, growth deliver per provide XX% our

of The tailwind a the QX X% QX and from XX% line, our growth, acquisitions. reported of year-over-year. foreign XX% increased reported top our organic exchange included X% components revenue grew revenue On growth

growth during the our the quarter, and XX%, XX%. America grew under to XX% world Europe geography North as Pacific grew Turning XX%, of grew the just Asia rest China grew by

XX some percentage continue we business investments across quarter, and enabled adjusted a system we and operating points XX.X%, the operating At to productivity, same was businesses. QX In mix. strategic volume it favorable strong margin to exceptional last Looking drive leverage performance, our the and significant make QX time, than at had income XX% business increased the adjusted our year. to operational higher PPI

margin the company X.X%. QX basis XX.X%, adjusted QX very XXXX Adjusted gross had details Moving revenue $XXX for operating SG&A came at Total margin. our quarter XXX the was from of just a similar year. than margin in XXXX million, and up I those was in in revenue, the gross leverage. in quarter expense of XX% on the was reflecting mentioned P&L, higher the points prior adjusted points of versus of basis manufacturing XXX in a the QX to The total to as increase our of percent R&D XX% strong R&D QX volume decrease drivers

mainly foreign quarter, to the changes QX higher the and in income non-operating due QX year, line below interest for expense results expense levels. our million than last other was income million, was due $XX increased million net million, Adjusted with net Looking quarter primarily $XXX the exchange. debt XXXX, than approximately $X to in lower $XX

Our tax dilution. XXX in share rate marginal shares were diluted QX profit tax by due year coming pre-tax in Average $XXX impact at in of about versus the option driven repurchases to This million is adjusted basis was in QX year-over-year net rates. the last quarter year-over-year and substantial XX.X%. the points $X lower million our increase up

was balance the quarter. Turning to the in cash flow another for flow sheet, cash great highlight

great business to PPI is pull through strong performance. Our on the system line very top us enabling cash deliver

nine billion approximately in after continuing million. expenditures the cash shareholders cash $XX.X and we returned $X $XXX and billion quarter, $XX billion cash net with and billion months, QX to debt. was first total was ended from free approximately flow $X.X million We of operations through capital the $X.X in dividends of approximately For flow deducting

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

from revenue It bioproduction the diagnostics kits, molecular on impact Life the and on therapy majority vaccine is Science clinical sample provide Diagnostics QX, four to in includes to reagents controls and response some go preparation revenue production From I'll genetic Solutions. the the quarter, had The recognized businesses. instruments, the similar performance framing business last the lab This from standpoint sciences segment COVID-XX in revenue reflected the for tests revenue results. is from in biosciences some a include kits. business. with of color testing and the segments revenue of in COVID-XX segments, into developed around our business also and the of Now recognized supplies response thoughts Specialty that start testing

segment Laboratory business The market We and media in the in microbiology the the also recession for as and support biopharma also Products recognized Services revenue safety viral vaccine tests revenue channel. as in and a PPE segment channel revenue and for business. testing to workflows PP&E market for transport used and healthcare manufactured includes products storage in therapy services includes by lab well plastics business. equipment cold

So, the societal breadth the of the response margin it profitability scale on of From our based the of I on pandemic. take of in, and levels different to a the standpoint, across response impact the detail was revenue, think that a segments, of COVID-XX revenue. lot but demonstrates really to the varied

continue though from incentive of In colleagues we're investments capability revenue. during make in included that businesses, to recognition, addition, benefiting the in our well COVID-XX investments. in compensation not terms even quarter, production we R&D strategic commercial as investments This response and our as

investments each able with the We segment. of necessarily align do performance. in size of these company's to overall strength does are the The revenue response COVID-XX this not given

So the some that reported does skew margins. segment of

of even an company, reflects the from current the future. successfully very standpoint, environment company a management segment brighter for moving margin active navigating So, the and the it lot a positioning of parts

we X%, quarter, and In decrease commercial Moving our mix of an segment lifestyle a as year-over-year. reported points businesses, increased charge volume led sciences QX, the this reported points sequential XXX%, the percentage in at to genetic margin operating QX, and adjusted with make new performance down and and strong driven well starting the a investments quarter. QX, of took productivity. X% business execution XX points in drove pull chromatography business. continue the public income This strong supply growth through margin on loss in a electron from operating income decline volumes We biosciences of to $XXX solutions on and successful to Life an in mix, Analytical and XX.X%, adjusted growth of adjusted by spectrometry The lower contract percentage Thermo strategic percentage operating activity XX and in revenue strategic million we quarter revenue adjusted decreased organic in by investments, In was the revenue our offset XX that Eight exceptionally scientific organic and bioproduction saw the QX very in improvement The Analytical partially as Instruments mass very by our the customer Instruments was return businesses increased margin growth Selectris operating and increased launch up XX% strong business. Sciences XX.X%, remainder XXX%. was was and XXX%, change was filter. growth microscopy very in the Solutions, of due business good QX for imaging segment level was business details, segment. our business to year-over-year. strong triggered in a to in percentage accounting and reduction of and QX, across point one-time revenue

healthcare to is in to and growth microbiology pronounced Specialty most testing deliver diagnostics routine businesses. in growth increased in immunodiagnostics market channel Turning to revenue the us revenue enabling impact by very our organic was revenue significant XX%, Diagnostics COVID-XX pandemic strong quarter, continues and was and diagnostic XX%. activity, in clinical the the our in QX reported response segments, businesses The transplant quarter. this diagnostics

strong XX.X%, However, pickup activity see XX% was leverage in saw XXX adjusted operating offset prior strategic margin points volume increased the the from income basis by mix and negative business year. and a investments. a it Adjusted up In quarter very partially was encouraging to QX. substantial we operating from

prior income services segment Organic revenue businesses. for revenue our we and earlier. strong saw in basis the Finally growth reported the Products Laboratory growth that In increased adjusted quarter, leverage, operating the unfavorable strategic channel, productivity in laboratory XX XX%. In the pharma and mix mentioned and margin was business and by market was operating lower and volume Services but QX than was I a Adjusted and strong segment research XX%, in drove than XX.X%, quarter points segments, products this more year. offset XX%. increased safety QX investments

now and for organic on guidance. growth. revenue I'll So me help the EPS the growth full-year provide quarter current with I'll let with adjusted that, an fourth and provide both XXXX your you you to I'll to with organic certain start modeling. turn for a full-year XXXX. also update view assumptions for

that the potential demand well above both as XX% XX% be able and customer From QX. standpoint, customers estimate billion result, by a single for current could out in the Our as QX should a to The level, through an growth the revenue evolve, organic base organic to of continues that growth impact expected above is driven in and play support the XX%. to That's capacity business our response outcomes and below in digits. COVID-XX did $X.XX of we're be low-to-mid pandemic of positioned QX. we

vaccines. from revenue in the of terms be In response growth ramp testing continued growth and similar our the COVID-XX extent color therapies volume undertaken of also leverage in year-over-year and per outlook of adjusted outlook, additional QX. we significant the our a this to organic to most approximately by on determining in A deliver factor customers the growth, support QX. expect The earnings includes prior the of share, XX% quarters, will few earnings in level points of adjusted of considerable XX% expect we volume that share per At QX.

including funding year-end the Supporting to seems growth, being of with similar availability well-positioned business seen estimate for extra environment to current QX, billion, levels XXXX assumes the return that context, at this start should XXXX not customers a QX base of growth. than in two XXXX, earlier weaker reasonable activity assist a days which anticipate of the quarter in the the the to organic the full-year benefit spend given assumption to over slightly this outlook all pandemic be the our current Regarding and a like is by higher. offset does year. of to growth represent $XX.XX height would XX% The XX% revenue the lockdown in

additional for that growth on some an is revenue will the terms our to now XX% over update in XXXX, per XXXX. full-year share, FX FX on we'll adjusted modeling In rates. on of of regards the for on We're truly which I impact spectacular assuming current current XXXX earnings track a to represents have move for estimate year. based full-year. elements a we're of the With now negligible $XX.XX,

We expect be be full-year capital now $X.X CapEx adjusted for $XXX million income million million. net the billion. expect in the that the be cost $XXX This to for will to year assuming approximately We're other income interest $XX XXXX. we and net about adjusted Net our tax response of rate XX.X%. are to expenditures expected be support includes approximately to year COVID-XX

short very and in on our and bioproduction have We provide and strong long-term investment. businesses. continue to opportunities benefits pharma execute while on CapEx These particularly services growth related returns

that deployments, through dividends, shareholders capital share $X.X estimate We're year will million the further remainder between share the capital of billion we we're terms and buybacks In also assuming average of that completed XXXX. buybacks XXX continuing of $XXX this assume in no approximately a million diluted we returning to the be full-year QX million and in count XXX and shares. to

back So, performance call ourselves the to responding that, company in to to Ken. wrap to to up, and position turn deliver the over as exceptional can see continue spectacular leadership we With in you our year. QX, global the effectively strengthen I'll our a extremely pandemic, from manage

Kenneth Apicerno

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

Operator

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

Tycho Peterson

little sustaining with strength, this and Hi, kind on LPS XQ, XX% non-COVID-related organic. here how vaccine if and in into want about think a trial XXXX? ramp quarter is good to the do I'm there stuff morning. and Congrats this work, catch-up on and level benefit could you the on was recovery the how provide in start the impressive. and quarter, of from any ramping LPS just you Marc, I side XQ of of color certainly wondering much versus bit

Marc Casper

Good Tycho. morning. Thanks,

all businesses, three So, in the of in & terms of our the Lab quarter. Services performed businesses Products

CDMO certainly and types at three embedded of and our on normal and the products So that's in ramp Clearly, the services, happening, response we you see the or of our we lab types up, our company, that's vaccine COVID-related our activity seeing two and and is that's sort whole business. different pharma numbers. you're group, pharma channels saw the business, for did same those therapy services activity business that ramp point, customer activities, up quarter, the as different in in

things You're as cold business you we have also in seeing like use products our for well plastics all then equipment. lab demand lab would very well significant as our as PPE demand very strong response. as the business, in for customer our our supplies for storage COVID channels And

gone significant activity. very, of know, and cold products. leader those storage types effectively, is in market you we're about top right, of well, for those very benefits and The when very then cold As of the you the use, basis getting seeing that's read demand so chain that vaccines some laboratory the storage good, you're needed providing on a for obviously we're across supply of

Tycho Peterson

of you you academic hospitals, I'm the seeing talk a of which on Great, about side, seeing talk lot then non-automated that plastic the now about wondering bit the Obviously a just and of interest your from of business there. PCR in then think Is you're are first-half Amplitude, had and then testing, the and durability the the it's noted. could if can follow-up reference labs, curious strength year, views with durability throughput, driven highest little Amplitude or well. both got just as on on you a just you about how you non-amplified Thanks. labs traction the as from positioning

Marc Casper

Yes, you think through of perspective the the and strong, to terms world, been no of accuracy, instruments headaches we testing, the so, if base very performance we be and up, Tycho, pandemic. install it, customer have for have demand customers PCR standard right, ramped it around in our a the of supplier from supplied and there's really and that our continues in about gold largest terms been

Amplitude us. and seeing We've is systems, We and ahead X,XXX that know and capacity an labs seen reference hospital ultra-high have demand been seen we've large day, demand rely that system, per from they can right. throughput demand. built very governments, our over tests customers on we're have of happy, from and demand therefore consistently,

that so that will So supply throughput, because we've had good is support be enormous a for growth right, high a niche that labs, it product dedication our drives those the the really volume, driver. quality pandemic, the given our volumes, are ultra-high application governments providing and those but reliability, the throughout tests, of

a because continuing it you the of continue level relevant terms XXXX most quarter, demand to products with in therefore those unfortunately, believe we of our strong in is because, we the to Tycho. testing Thanks, to is PCR In be relevant fourth that information, us. pandemic and going comfortable are going customers we're gives be durability, accurate still the very to with expect with and that

Tycho Peterson

Okay, thank you.

Operator

Vijay Kumar open. is from Evercore, your line

Vijay Kumar

guidance environment for QX. of to academic there look tailwinds XQ, tiny guidance at just heading being XQ, to QX congrats, on by $X -- $X.XX were you billion of of, guidance -- Maybe revenue, guys into new in base Thank setting and Maybe to -- COVID comment just digits guess maybe for that north I when Marc, one there, pre-announced I'm you the low the bar element, $X.X QX and mid it pulled impressive. looking did driven billion if XQ we of a for forward are if it and of so looks like that's tailwinds was of billion if on here you, and is $X of really look single coming at curious that's I a biopharma. any guys, you lot guess trying the beat the some billion, industrial get

Marc Casper

to for Yes, to question, a the be on performance, set exciting and so, able Vijay, it's thanks bar right. new

So interesting that's for been sure. an time

meet it's that based bit to In terms guidance, bit way we think there, assumption, want we spend on have customer don't similar saw funding, if higher our was is a it's in we in disappoint. know. QX year-end demand, and we're to well that it little fourth positioned conservative to the is not business an a base of what our better, feedback, the than to quarter that early assumed assumption, It's and customers about little what's year, it to was is to softer it's a last and and the logic if and

you to quarters if if we the there we're know that, is actually, is like and these right. funding did in years out going few it, strong or So the get last many money go out

our So single right see role, and demand seeing now very mid you the at we that's vaccine our COVID build seeing solutions as for growth. and the When well. response. strong a for our billion, very are low to we strong We're look testing view also on the continued therapy demand base business, in $X.XX of digit

You have month less visibility December. into the of

less to we we and an pretty that much I visibility in versus into we we better levels like So of in it's to December billion were couple visibility, at it strong. wouldn't saw November, seems we third for the why and over-read came we be made demand $X.XX billion, visibility, assumption have $X.XX just have a be and what months, have $X billion. just should and similar going that October quarter, but in obviously, nonetheless

Vijay Kumar

update Marc, extremely contractors the on a just a about about one billion, helpful, comment the any on, and guess, follow-up vaccine you day analyst that worked on I made That's number? orders at

Marc Casper

projects, in a it's Yes, we so it for of so a $X our in in grow, We're call therapeutics, at terms I'd of active number 'XX billion-plus of this over and to balance and billion, something significant and point. that continues year range number 'XX, broad, it's than pharma the $X said role year, this -- it's vaccines the a next but progresses. -- our so XXX services, and the quite the will contributing into role of revenue, biosciences, projects bioproduction, just over not and fourth and contribute to as certainly our will quarter, therapies about on is and more vaccines, is be

Vijay Kumar

guys. Thank you,

Marc Casper

Thanks, Vijay.

Operator

Wolfe line your open. is from Research, Beuchaw Steve

Steve Beuchaw

up question we is going a on research of backdrop. looking then Marc, is extent research is, wonder the within how labs is one bit a commentary to sort a what all medium-term in of opening just morning, wanted right and and about guess sense, in good lot in your for the the the university perspective watch here on I universities little landscape. necessarily a certainly necessarily the remarks, the year, given university funding Amplitude in prepared ask to on thanks and research. perspective on here. but on academic just My and your upon point two-parter. that unknowns one academic, progress could we one in if you unpack versus as makes about near-term to but headlines and follow-up the to all to extent and it broader contingent I funding, I to reopening time give Hi, broader just quick testing that U.S., broader going what's what of they're a China through the a then on on reopening, relates back-half now, not the all as funding the Europe of very

Marc Casper

Yes, Steve, questions. so, the thanks for

is So, to a that the interest by activities, in pandemic, infectious then governments, came remarks, very of academic about my really, Even quite ramping a role that's going three it's that. they the impacted [technical made positive things return probably their and mid what we and such the to but growth is the work, but -- disease, all happened midterm, on own a the and be seeing good good to funding single-digit economics, Those from actually we're see of NIH low a at single-digit really so U.S., in much saw their paces, beginning clearly right, obviously is has huge I already growth comments how low see interest different regions, at and to the has there's midterm, the research now the here. environment thinking customers like terms difficulty] global to been back that a that historically all played there. of of to to by own of are government, for and When be good going short-term up it's back in was I academic institutions, I'm importance, environment. somewhat a we're more situation phenomenon; see more to it's market, the the very headwind, funding mean of bit across the to that growth,

Steve Beuchaw

of for PCR broadly given sides but like Super clear. of that a lot next makes or towards and market not follow-up, some more just symptomatic, for and that beyond, over the perspective the again. year on have market? be sense, hear interesting how approach building Amplitude, you evolves The should all unique screening, Thanks screening a the of which you around an commentary for on acuity testing looks higher the to think

Marc Casper

able call screening. is to for which is well in going is to supplemental of of role and social pandemic Well, seeing work Steve, in it, support both really the for to obviously as managing as things testing around in of that, well those applications is school, tool distancing, in things, terms kind and and applications more mask-wearing, be we're a Amplitude the return-to-life what and demand testing testing, of good and as a like is those we hygiene, medical valuable all more

with get versus accuracy, you getting levels Operator, accuracy plays very economic, a rapidly, there out there, you're other which and very but depending trading the of and on something throughput, and get is will one. PCR also play a a some role, therefore You of quite can high and a doesn't extreme take the it's are the application applications results what it therefore we'll make what that customers certain for. that's technologies of role, next sense lot is

Operator

your open. Bruin Bank line America, de of from is Derik

Derik de Bruin

you, Thank and great. good Hi, morning.

got color follow-up. give you just that on in the more little a quarter a of I've bit in PPE the So bit $X on down billion then testing little can and how a bioproduction, split us that, -- broke

Marc Casper

morning. good Derik, Yes,

portion testing related think of terms and it's when of the the majority the quite expansive, that, actually portion in So testing is right. you $X billion, the about

PCR that So kits, largest is from going of our the lab-developed also instrumentation and COVID-XX be TaqPath proprietary we tests. on have piece to significant revenue single but kits,

do of the and opening and that announced built continue we on viral really tremendous sample industry in Scotland. grow, the that. the new to as start On viral our we'll the nice a that to and that of have that facilities business specimen part a media collection, from sample to in collection grown so kind very European expect media has transport facility that at that, QX to up Europe the there. we across was transport producing and step so the that, ground well. a top that rapidly, that's to the very continue build, to market, key able the prep already of a So QX, is We be we year of substantial beyond and momentum start with transport broke end two provide of lab, PCR ecosystem up we're all We

that lower good then of, the I'll and going in from a to so, be very role I because there's was level a of high, our has is which next to standpoint. was from up So as catching I'm therefore think with down, as most lot that there we fastest-growing through clearly massive good building don't the continues be pricing this we elevated all business. Volume and prices which There in important. clearly is expect societal in therapies, aspect, right that's that's probably -- activity. beginning the It's the the demand, was the suppliers PPE, and the and and probably because that the our volume channel of point, aspect a the pandemic sometimes compared and comprehensive price, From still -- you would activity kind see to vaccines there broad it get constraints. industry at has to supply is have of moderate define say, smallest while come broadly position at a

that manufacturers single-use leading positions that to in the it, way what it, about and of and our there's was historically and media, a would cell articulating therapy, look provide to vaccine the Stephen think a you'd be or culture as we bioproduction, and technology, purification So the meaningful our needs and our substantial a through as and nucleotide well to support that as position of very actually those role enzyme has we're doing resins. At growing in point, expansions rapidly business same in well. biosciences the production, capacity very at

set of activity. one that's So,

would you network, a a activity you The of sterile some services our vaccine or obviously is the where API the see that in that and you around are our in with fill-finish small second of the of that facility. our also set our see business, but do filling pharma antivirals or substance in biologics them can plants, even you molecules, biologic, see and drug

build, So, serve well-positioned you're year. a already skill and in into in very that that we're incredibly therapy starting way QX and next to opportunities, to and to vaccine see will the and continue build

Derik de Bruin

new you seeing just quick if PCR dealing you for and are first-half the a up one know, get instrument install your can then business, one or your year, essentially sense? orders and base year-over-year, base is, talked analytical are from so LCMS, appendix a you you roughly flat, follow-up, about what's on back you Right, instrumentation that essentially with orders the of back,

Marc Casper

sequential So, faster for QX versus revenue. the growing really there the in our improvement than are in revenue answer revenue, QX, much orders strong of terms is the the

So, we're building actually backlog.

QX shifting is So, I to just from QX, up. don't think really picking of customer it been is activity much

and spec mass than quarter bookings You from most science life in business That business. in returned the to that chromatography revenue business see that. quickly a and growth stronger our were perspective,

in analysis, chemical year. improved ship shipping expect you very encouraging, that's and normally quarter and then, the and would we as a a but sciences we qPCR, of flip side, spec, would base economically have right, in life So, install are the what on mass we're like lagging sample that prep that's from a very those areas to relative substantially, sensitive lagging,

doesn't So, it big gives number, exact you but been. give magnitude you the that's how it the of of the sense

Derik de Bruin

Thank you.

Marc Casper

welcome. You are

Operator

Doug your Schenkel from open. Cowen, is line

Doug Schenkel

there materialized COVID-XX the Do in you're light on of kind Good longer-term has especially relative higher commented you particularly you the bioproduction about given response of on morning, QX could or support recently, what levels stable of then, updated really and XXXX, COVID-XX Analyst making last question questions. at product demand year-over-year Marc, the investments beyond off than more same least in be for seeing tailwinds in you're you everybody. month, will have thoughts and point, any this to these abates? today even on basis when higher expected contributions in our revenue that bit COVID-XX Day Thanks lead to at to XXXX think think XXXX. taking categories, in during a I building this, incorporating pandemic diagnostics, to do that lower, each demand in side, meeting in a the a of the and

Marc Casper

Yes.

have can the I… down to it's I what say is flat, if on right, either I that Doug, right or up the answer, first then XXX%, So, be on one,

Doug Schenkel

Yes, yes.

Marc Casper

on. speakers] [Multiple -- XXX% accuracy

pharma are that's four right? clearly those the think things So, building, So, better biosciences if that than position right? and or then great or our questions, business are building, nucleotide, three that's know, and services bioproduction, about pace, I two weeks approvals, process broadly, you are all So, ago. cycle, while with get the a for and It they're to looking know, takes these through efficacy. things very it doesn't -- as much you long a for these products clinical moving at faster but

is. that's good the and of building, that what see we in outlook terms for So, us

like the be you that year. are analyst six so testing and In in to Europe know a as cases That in we'll this we more So actually that we're that into the you adds into day the increases the after know, more get be in there's and 'XX, week know, things of really right? even going still weeks usually same unfortunately the but of with more the to -- durability we're view living going more to boat means pandemic terms to durable, pandemic. with lot or meeting, likely that, every

great put about you way $XXX investing year additional. capital roughly, is the in so in right, investments, what million the significantly, we question, almost it normally think So, the know a of it's is, we're in terms longer-term right, to

right. doing We are it quickly,

pandemic-related, the term some we power that of not going are bringing markets everything of them that you facilities online actually to If of sense are we that the for is very commitments already right, to pace we much other are demand, which you right. customers start think we getting commitments longer for Pretty are easy have repurpose think expansions the System. and about -- large demand other therapies, are about to PPI basically gives is you that in that Business put to we right, want have for products done also that when say finish, up, are freed vaccines that we from visualize, customers the and and seeing

a we have in our So, that facilities. number of

vaccines at the So, unwind, us point, you'll of useable. and sort to therapies capacity because then related and some to that pandemic will it's backfill perfectly able see the you'll

might be that expanding we lot capacity, a as not not we about. plastics, our a you have lab where Some of think category been about talk the if stuff intuitive,

right. say, be For to going the demands, simplicity, able expansion be have the share lab for market in typical XX% we globally, to capacity repurposed is

we'll out backfill that other So, we modern have COVID, with more a and are going manufacturing it. meet then than we'll We'll into from footprint, surge demand. the had go more cost-effective, to stronger we going and

are I actions really through the we pre-pandemic taking, future growth. the and for setting realities so think are up actions that's with have. future were are So, we we a that taking why us now Opportunities that conceptual long-term we is more for bright excited are the

Doug Schenkel

others and I'll Okay, ask much. questions. and there, Thank leave very let it other you

Marc Casper

Thanks Doug.

Operator

from Willoughby is Cleveland your Research, line Steve open.

Steve Willoughby

some following morning. spending Two you your you talked don't are orders provided am assuming picking questions commentary seeing that up, as end than if previous you, customer faster for you you I Hi, on mind, how but are about growing weaker you just comments Marc, up good how of one revenue. to about guidance the within environment your curious talking today, activity really a

provide on two on the I of jive sort for could each those you. comments follow-up you color have other, with if wondering and then Just how different any --

Marc Casper

talk Stephen, bit a you to about want little that?

Stephen Williamson

be is higher, sequential that No, to our so is so customers to activity of business spend, well-positioned versus up it's as our around we QX, the comment levels the yes, going an similar and aggregate customer made then said, demand. about if assumption level Marc but have performance, in help satisfy that picking yearend improvement assumption QX and in

Marc Casper

And year. our so topic lots is way right, Steve, not this right helping It's where now say, It's which not your have discussions budget tacky focused to look say customers. you, another just you with is -- a what that going not and like. a little are to a yearend normal is we on of a is so

to So, start I again for place the that's think a good quarter.

Steve Willoughby

bioprocessing level then maybe regarding what the a Thank wondering if comment and in business saw okay, of and of good, you. growth for terms could Very at overall, you business level of I was maybe just the and also overall? you there orders all bioprocessing

Marc Casper

Growth strong, significantly therapies historically play stronger expect, significant performance, strong growth, very, than than which a order COVID. is of and high level broadly very right. and a playing in in all classes that so role you the we stronger very orders We disease, were strong vaccines the major of would in and role are growth

we Thanks capabilities. Steve. seeing very for So, strong demand our are

Operator

line from of comes question next Your Dan Arias the from Stifel.

is line Your open.

Dan Arias

and trying timing but from some of be that fast a this you I level, incremental just follow-up terms bars I non-COVID you is can morning, all products COVID a I it at on loads. the of point? steady look uncertainty which project looks the wider does campaign error are on extent from Or, where they this I obviously when it's work maybe comes non-COVID real you. and services sit mean comment guess Marc, work? companies that might than visibility at as there sort there mean around am are in to here? the move color high Thank when normal to some all non-COVID you in maybe understand guys. bioproduction, just Good strong of on at it to balancing

Marc Casper

development sailing It this seems if industry produce have our time, smooth period for able about customers, products manufacturing -- been the across develop process. medicines their think been and through their through mean the right. pretty has to of steady. not Companies I

biotech haven't to on continues grow manufacturing the we very of and COVID-related seen So, pharmaceutical. disruptions substantially. It side

there some resources. to of be obviously is going diversion So, short-term

and COVID there things our what from is high much that noise clinical years because three it's if that's and less theoretically have level, than the new of quotations or two think activities, project could work, maybe in now new look some like but work. work, trials So, been I very extraordinary at I it has been development because

think it's So, very I good.

Dan Arias

volume just good. for the Obviously, when company. bought the margin Okay, Stephen, and on the within environment margin up LPS? can I so line pretty was second mix there appreciate that. Maybe touch looks at Patheon XX% the I this there, you think Patheon or

to were it we the segment of demand profitability look if that business could? sort up loss years forward, if like it's can shapes the you So, do look way couple LPS increasingly just over provide next of here that to some

Stephen Williamson

Yes.

the and be I margin made utilization So, very for think Thanks, that we've with Dan. future capacity strong business, great will profile. in the as more of margins drive we progress

Marc Casper

take to just one more. Thanks Dan. Operator, we are going

Operator

Meehan is from Nephron Research, Jack your open. line

Jack Meehan

Thank you. Good morning.

Marc Casper

Hi, Jack.

Jack Meehan

on point hoping Marc, comment the I data you was bit could little in a more favorite the press It's R&D release. investment. my

down is spend? there think the How should or some spend? incremental about diving way projects So, you Are this deeper payback are maybe take? of and the forward incremental where list, over-indexing some to you long pulling just the that on a

Marc Casper

Yes.

R&D thanks was up for spend the Jack, the in quarter. XX% about So, question.

really So, actually demand step more adding some we're talent little areas investing on is -- about are that and softer. has been key substantially. the It's we working where doing, then that a bit

is certain Thank it. couple of in years proud we during returns first couple next in and growth in playbook investing position term. that society you, focus are what downturn of quickly, a and the in long question, we did, of the our Jack, we kind me the role would playbook much the doubling R&D the wrap had of same about investment think our this financial back did to show out and and things, of that very to ourselves where doing crisis are for Very doing a up for on are we time. so up helping we the we we for exact and the in areas strong way with customers bounce let down will certainly that So, is so high the

I you company We Fisher forward the manage of leader. of stay our hope progress continue come safe, look to at Scientific. always, to on are everyone. even yearend. stronger appropriately support you Thermo your that and to you going Thanks, period out We this updating industry for to thank ongoing and as

Operator

concludes today's This call. conference

You may now disconnect.

Thermo Fisher Scientific (TMO) 21 Oct 202020 Q3 Earnings call transcript