TMO - Earnings call transcript Q4 2020 | Thermo Fisher Scientific Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2020 Fourth Quarter Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. to moderator like today, the now Mr. would introduce for our call I President Investor Apicerno, of Kenneth Vice Relations. Mr. may you Apicerno, begin.

Kenneth Apicerno

Good morning us. and thank you for joining

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

important begin, statement. Harbor by me various the a Safe Filings. are on and subsequent report make the XXXX. differ materially and let report Litigation we may from Form and SEC statements including prospects those our company's Investors as recent cover purposes the result of also results on Reform XX-K of in on Various may Safe Act provisions annual for the statements that under XX-Q, indicated of we company's expectations, Harbor about section those briefly heading Form the the constitute file these which on under So, quarterly future most website discussed with forward-looking available plans, the Securities Actual SEC, remarks before factors, Private of forward-looking our

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

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

Marc Casper

morning, today all Thanks, a beyond Ken. you and fourth and the our staying wrap call been get I Good pandemic. you that joining are up a Scientific. what's work of Thank year to everyone. exceptional for us your quarter truly Thermo families we as for Fisher hope healthy for XXXX

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So in after across the to the growth year customers’ speed evolving we in billion our earlier needs. scale of measure. results business response XXXX. The XX,XXX delivered any Through moving an colleagues enabling that tireless disruption pleased the our quickly our to results their report strength the a of delivered included strongest to meet world. COVID-XX and that around year company supporting XXXX, outstanding to on by incredible we R&D globally, $X.X even the brighter base in the our and with working talent, investments by on globe our societal with accelerate seen for I'm significantly of the efforts, an generating and future capabilities company's create to us This our returning at response focus speaks unprecedented activities in industry the new our led customers We capacity. to history pandemic. to work the allowed revenue, response to

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share Finally adjusted to in EPS quarter. per XXX% increased the $X.XX

XXX to full increased ability move $XX.XX customer $XX.XX our the Both year, at $X.XX XXXX. all to to billion. with truly for strength performance our we growth share. needs. Adjusted XX% by speed income results strategy to and our points in expanded XX% we financial rapidly a to the adjusted metrics adjusted fourth operating to our basis on We margin And in and operating in to per were XX% our evolving billion grew full exceptional scale increase revenue XX.X%. by Turning EPS quarter year and demonstrate of responding delivered

market our and and pharma markets the again growth very biotech. to you performance research serving performance in turn now and market safety delivering across with on quarter all growth outstanding approximately color end bioproduction, give some saw this end and our We customers, We robust services, businesses QX. and Starting year. had the XX% me particularly our these during for pharma biosciences, channel. Let

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for pandemic both and and the end in of full the on declined and applied government, industrial in single-digit the the customer academic impact year. the markets significant the activity growth Given earlier XXXX, mid

incredible growth. healthcare, delivering Finally, quarter more than and we another XXX% in had diagnostics

the accelerate customer viral revenue media continued very sample Our to COVID-XX robust. demand testing PCR preparation, as in transport solutions our remained quarter for and

the For the around in world. by more by our supporting COVID-XX role healthcare testing full leading diagnostics year, and grew driven than XXX%,

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As impact back I the our during humbled year, environment team how this incredible supporting response. many think of ago, evolved by the the the had in a quickly call while to so I'm and pandemic aspects year conditions navigating

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customers In XXXX XXXX. we these engage vaccines to to expect us result, billion $XXX led a therapy COVID-XX of $X to million this As that and vaccine help, therapies. number in to a and significant increase in develop projects revenue and with produce on

capabilities Our Thermo to pandemic the Scientific. comprehensive response unique of the demonstrates Fisher

our strategy many framed update business a just to turn me a of by and growth highlight let few our Now achievements.

there reminder, to three our pillars strategy. a As growth are

innovation. First, high to we're committed impact

never and regulatory for a our we industry providing established gold the high-growth TaqPath we March, leverage was high markets. a in before. unique and we Second, with an response to in pillar, first gained customers. Starting testing. emerging kit has approval quickly to We test combo In developed it our the leadership in impact And our the of seen third, PCR-based launch extraordinary worldwide at COVID-XX scale value year pandemic, innovation. COVID-XX our to standard scale proposition customers deliver

health our expanded significantly surveillance. Amplitude testing for solution test for products, including TaqCheck high-throughput of our also and COVID-XX-related our We asymptomatic PCR-based portfolio PCR

our across analytical business In number strengthen a in base positions biosciences our highly products to bioproduction. innovative instruments, addition, we and leading launched of

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and strong develop mRNA. and specialty sample already eventually greater this our other customers proven fast unlocked us operational this growth at have success clinical the adding their give our prospects in this to strong of COVID-XX which enables using installed our Bringing because for related way with us our We've new and response infrastructure, positioned our helped and examples. have help are Let The broad vaccines XXXX in operate teams customer last to our pandemic all together, partner executed and even the help that some diagnostics, years. offering significantly excellent a trusted our base, near-term and our the strategy as vaccine leading And well we support needs system our was -- modalities uniquely as scale relationships, our as how up vaccines built the deepen needs. an throughout to as in dramatically strong enables year free differentiator the potential, me -- extensive them our produce were and and the and now such customers invested many moved work you well future appreciation scaling labs molecular diseases. their COVID-XX through therapies and of for we to The relationships and We needs pharma in longer-term incredibly is a our execute as for positions we therapies well needed we've volumes as addressing with for When over our instrument long-term company. capabilities speed hit, quickly entered beyond. seen business We and cash diagnostics. flow. PCR translate our us key PPI preparation into to in in growth top-line discipline a growth earnings year. customers benefit further growth will and growth in we with PPI XXXX biotech increased

and $X.X R&D our able we up me localized to XX% you we billion. our in as substantial color our performance. our the Let to biosciences actions, in In the In half position increased further long-term investment And last expanded company bioproduction, services for some a of experience. we leadership. to value ramped accelerate unique we as investments. and well because year, high-growth customer advance with our give investments on to In emerging enhance our businesses investments and total, XXXX, an innovation, the differentiate in invested our our pharma to CapEx approximately we were bright P&L for growth, billion to significant planned combined invested by will CapEx strong capabilities in customer very half capacity roughly capabilities commercial make additional These markets, proposition, further future. $X

capital deployment. to now Turning

continued record execute value a our have to XXXX. strategy of strong track We and shareholders, our we in creating for

a to in billion and During returned the growing our share year, shareholders dividend. we $X.X through of buybacks total a capital

In we CSL know, our an to We our we cytometry standard technology active strong strategic with pipeline. acquired enhance this partnership Mesa the business format. into business, acquired Pharma our vector very after And year-end, for European entered a analysis. -- viral We rapid several you our Biotech Phitonex gold to acquisitions. and PCR-based agreement biologics we for from expand to adding an bolt-on rapidly XXXX cell Shortly Services growing enhance in to diagnostics, point-of-care market. flow As with deal strategic acquire we a active sheet, balance a capacity announced Novasep. offering signed manufacturing ended 'XX testing

continue disciplined to As good stewards continue and approach opportunities our apply we'll our to of be to capital. always,

cleaner Before positive which the are Fisher impact. a enable priorities. and our world. education guidance, also a healthier, that and significantly of embodiment mission, in I'll underserved of terms governance the was to the the Thermo is having highlight of benefit I a couple year and of big science, funded environmental, impact is for been the progress STEM a world That's our expanding customers that launched to turn make XXXX significant company initiatives social One safer. that's we to always social to our on a true We've programs on having Foundation focused communities.

established and a return historically universities program, and these we proud in collaboration colleges a we've that Project, the is of and with to testing to safely black where allowing Just COVID-XX I'm faculty Another students invested campus. step taking are world. a the many our as a on by steps measures, the back the make year. around reflecting an and difference we teams all whole, year in our to communities outstanding Taking a delivered

our to let ahead into outline that and will Stephen but Now looking cover XXXX. the assumptions quickly guidance, factor highlights. me earnings revenue the

full of our We're expect guidance, revenue and $XX.X EPS which our XX% deliver would record. per reported to adjusted for growth $XX.XX track guidance in terms In of of in of billion result we share continuation growth That's X%. revenue the year. XXXX, a initiating outstanding year-over-year

our us our growth apart as call Stephen, of XXXX power success what unrivaled the for in you are The over a who the we key clearly industry. the demonstrated company. as strategy leader truly leave and of I the hand Before to takeaways with year. my I'll sets

enabling stepped During our unique contributions for the recessionary of society helping time the important up a pandemic. of them their we and need, impact to customers, navigate

driving As investments strong as investments share same on time, partner to focused and a existing our significant Fisher and choice. returns result, their of market future we growth. made able stay were solidify to we At from additional the gain Thermo accelerate

hand in Williamson. While look I'm beyond. to With excited our past I CFO, that, as be ahead, Stephen? I'll XXXX and our our of about Stephen call accomplishments over the very proud year, now the couldn't during more opportunities I

Stephen Williamson

of a total results good summary with high-level everyone. and year performance the QX Then guidance. comments on conclude our for XXXX initial full Thanks, and begin I'll some with color company. provide segments morning, I'll our our and Marc, X around

in Similar growth organic As of year press XX% elements. achieved organic QX. and you full into grew XX%. quarters, our break release, the exceptional quarter growth saw This I'll in an previous down X organically resulted in to we

revenue. and the scale improvement. QX, is organically, business performance COVID-XX of the of of another quarter In grew response the base base first The the is the sequential the business second X%

base For the commercial flat by in a offset year, activity result full pandemic, great was economic the year partially business essentially earlier as due to the slower execution. the of

in $X.X earnings for revenue XXXX adjusted fourth we and is growth significantly in noting also revenue to for we instruments. of Business also million bringing the XX% support PPI that therapies. COVID-XX for largely $XXX impact Our products response increased testing-related quarter XXX% enabled COVID-XX-related vaccines $X.X full billion, System again, and the by share per in billion. full from delivered generated in QX It year This worth year. Once customers to was our our pull-through, excellent the and and driven

flow. XX% in us $X.X strong cash cash year. PPI the was System flow versus year results Our Overall for prior XXXX. also to generate extremely Business enabled up financial exceptional Free billion, the

me Let with performance, you on more earnings starting our results. details with QX provide now some our

-- As we XXX% I by EPS EPS adjusted grew $X.XX. mentioned, to

year. was For XX% was adjusted in was to EPS the XXX% $X.XX, up the GAAP full up year, $XX.XX, last EPS EPS up full year. XXXX year GAAP And prior year. XX% from versus quarter QX $XX.XX, compared last

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

growth a tailwind full the X% For increased revenue in XX%. a XX% XXXX, contribution foreign reported year This organic from and includes exchange.

geographies. Turning growth to by our

grew grew very grew just of including rest approximately all quarter, the grew Europe which North XX%, the over grew America world China, approximately regions strong and Pacific XX%; During XX%; approximately delivered growth. Asia XX%; XX%.

Europe X% XX%. Pacific grew XX%, America the world over full grew year, grew rest of the approximately over and XX%, just grew For North Asia

operating points margin operating operational QX year. XXX income our adjusted adjusted than QX higher XX.X%, and was to basis performance. last increased Turning XXX%;

volume to adjusted to basis the by System XX% the exceptional offset and year, For full strategic enabled income and of near adjusted leverage, partially full all our XXX our long-term investments was operating the we businesses In mix. and us also support quarter which was favorable points drive and This is growth. higher business year, operating had across our for margin increased Business XXXX. than XX.X%, PPI

quarter to the P&L. company the of XXX XX.X%, up the margin basis QX Total year. on in Moving the from of points gross adjusted came in at details prior

gross adjusted basis For margin the up year. XXX was XX.X%, versus year, full prior points

the due in to the the adjusted drivers and quarter our same leverage. due revenue, was points the both those Adjusted increase XX gross was fourth margin. basis full For of volume in XX% decrease of margin operating year, versus the strong to XXXX quarter the as for SG&A QX a

and For year, for revenue, the basis and expense high-impact representing of SG&A Total year, adjusted an XX% innovation. XXX respectively, $X.X full QX of $XXX for of reflecting growth was to was R&D increased in investments full compared XX%, improvement million XXXX. our XX.X% points the billion

our results for mainly an Looking debt. for approximately and the at million, the line QX in Net XXXX. interest FX. million, full of than million $XX our $XX expense million, in was expense than last $XXX XXXX, due due the higher quarter from lower year, below non-operating $X interest of income a other net of million expense $XX million higher level was increase to to changes the QX $XXX Adjusted primarily net quarter, year was expense

lower income and prior $XX expense income net was year. $XX adjusted of than year, other which a full million the the was For million,

last rate versus adjusted Our XXX QX was XX%, quarter in basis the up tax year. points

XXXX. million the and to or diluted substantial increase higher year-over-year rate shares For QX, in was The year, profit tax was year-over-year, dilution coming in tax our about impact due repurchases. pre-tax XXX XX.X% the XXX were basis marginal the driven points in X than rate lower the tax increase the adjusted by net share option at million Average of in full rate.

were For diluted the full shares year, the average XXX million.

billion, our for flow billion. $X.X cash expenditure from cash flow capital increased XX% cash increase year. to net balance continuing of delivering net highlight Cash was was $X.X $X.X while was growth Cash another flow the a We capital operations sheet. expenditures flow. the were billion the significantly in to free free and Turning execution accelerate and flow strategy great

of During dividends, with XXXX, through we returned approximately buybacks capital $XX.X total approximately cash we and $X.X QX and shareholders stock billion billion and in $XX.X billion debt. ended to of

basis adjusted debt the Our leverage ratio was total of on last And quarter QX our a XX.X%, generated X.X XXXX. adjusted X.X company gross and in concluding as year net returns times exceptional EBITDA performance, ROIC my XXX from at points the end to on we basis. was times comments debt up

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

across the Pharma market on revenue levels viral healthcare business. scale response channel. channel segment of in and Products Laboratory test from for recognized the media cold of Services and segment profitability manufactured PPE and for the revenue. used well the as as the plastics products equipment for lab that workflows differed therapy This transport our revenue in on We segments the -- different includes storage our microbiology also by and also a the the business. from in revenue business From and for based Services impact in includes margin our and vaccine the revenue services COVID-XX research testing market standpoint, of safety PPE and

businesses. of our make during with compensation that as response well segment, of the we The This each incentive in recognition in our investments. capability In investments strategic not margins. terms of investments commercial, COVID-XX colleagues across investments all does production included some in and as necessarily R&D size the and skew segment the to of revenue addition, does those continued align reported and so quarter,

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

starting the Moving the and details, Life growth bioproduction revenue and Solutions. QX, quarter, organic In increased saw sciences and was exceptionally to genetic on In Science businesses. we XXX%. business segment with revenue reported XXX% strong growth our in biosciences

For reported and in was the mix, Science In XX.X%, up year, revenue we continued increased QX across volume very all operating Life XXX%, operating XX organic and segment. XX%. full business the percentage make businesses margin in this investments drove adjusted and and quarter, points was pull-through to year-over-year. income strong growth strategic positive we Solutions adjusted

We margins also had a from tailwind on FX.

was reported increased increase operating For percentage XX.X%, revenue was than an In increased End chemical organic materials strong in X%. of Instruments spectrometry XXX% year, revenue XXXX. businesses. for over adjusted the growth by chromatography the the operating in and XX adjusted analysis points muted, X% analysis this but segment, markets and full and and margin income more Analytical QX structural offset was and remain growth mass both

and drove activity We in of commercial continued customer these to levels businesses increased execution. strong see

the investments XX.X%, in year-over-year. productivity XXX offset Instruments the XX% points and Analytical full and operating margin X% decreased reported For was that the operating In adjusted basis the quarter, adjusted we segment I was revenue decreased organic declined down strategic earlier. by X%. than that more mentioned income year, drove strong very in revenue QX

segment. margins FX this We also from to in had a headwind

decline adjusted For margin XX% basis versus the decreased operating year. XXX operating full XX.X%, prior a income adjusted points and year, was of

to by the revenue QX, growth Turning In was reported revenue increased Diagnostics Specialty XXX%. segment. XXX%. Organic

below deliver still COVID-XX was but routine in and the levels, businesses. QX, The than QX diagnostics response testing our significant healthcare market businesses. level our in of channel us growth revenue pre-pandemic to enabling immunodiagnostics diagnostics for in microbiology, was clinical transplant and higher remains activity very diagnostics strong particularly quarter, Our

the was higher year drove up increased investments. For volume margin and In year. revenue in Adjusted the partially XXX% by QX, prior strategic XX.X%, operating revenue and than XX% full reported XX%. mix from year, was the was we growth offset organic and adjusted points operating strong leverage, negative prior income very basis XXX the was business which quarter

income channel, operating an year, versus and prior was For products revenue finally, increased growth reported was the a Services XX% and in full operating XX%. all of Organic year. pharma adjusted growth increased QX Laboratory safety the improvement XX%. segment, basis quarter, XX.X%, XX margin and adjusted points And we segment, the this research in our strong saw revenue in businesses In market laboratory and services. Products

is and mix revenue was full was year. XXX year, higher which than organic the margin than lower unfavorable points For XX% basis X.X%, prior business adjusted decreased the offset strategic productivity and and was strong than and QX, volume income was XX%. more XX% the XXXX reported revenue growth operating quarter, In adjusted In operating by in investments. segment leverage the

declined basis adjusted With of guidance year. We're XX% income the starting with the initial that, operating to XXX turn X% guidance. annual XX.X%, which was XXXX adjusted X% year, XXXX. EPS growth our prior lower operating full I'll the margin in over organic and result points than of year For growth adjusted will $XX.XX, and

pandemic outcomes serve demand demand potential positioned at year. operate for We around successful to aggressively testing. a for under to help exciting very performance. the exceptional how rather fluid, well of the And we're for company opportunities time, a multitude positioning growth to remain uniquely different year. full associated there and near the around the actually same with point out with another customers important for invest assumptions to long-term chosen our shareholders. to thought continue customer scale to be that year delivering We've along continued the of dynamics financial go outlook our it strong are than with frame view another a because this plays range performance The year, speed we'll incredibly at year, while initial of the give you was we especially scenario to any financial So very but

maximize in long-term just drive short So in stakeholders. will we XXXX, did and XXXX, our as for to all value we the opportunity

now the me assumptions provide initial behind our with you Let guidance.

In is organic X reported terms including represents of revenue, growth are There elements over our $XX.X XXXX, assumption. to key growth. X% X% which guidance the organic approximately growth billion,

base the First, business.

X% assuming growth XXXX. organic we're in Here,

COVID-XX the The second element is response.

XXXX; Here, therapy-related we're level with as plus This we year in roughly testing-related last for revenue we the revenue same in $X that's starting billion of assumption of an delivered which revenue is of XXXX, double reflects $X.X vaccine generated the the billion year. XXXX. approximately

you color on the me XXXX. revenue levels revenue. that revenue fairly similar XXXX. phasing testing-related QX of loaded response Let We're to linear is very the QX in COVID-XX front-end to assuming and be therapy assumed is vaccine give with some The

growth margin of in higher upside our acquisitions of to assumption. reported adjusted that the to and should later levels our Should guidance the year initial higher regards year. positioned We're have more progresses. the The longer the assumes of million really With guidance pandemic adjusted maintained, FX, sizable $X.X levels Our year. billion, X%. approximately in an testing testing customers, half a guidance second operating assumes well revenue X.X% than We'll this second be XX $XXX to demand may need than support contribute the or for the the in XX.X%, assuming particularly assuming demand moderate begin of as the on be points last tailwind actual in demand $X.XX initial or basis clarity then $XXX approximately lasting year-over-year then moderate to and of million We're QX we're potentially EPS XXXX. this half further year. will revenue to and

Our pull-through significant by productivity offset made drive to PPI will and investments benefits, will to that partially in System be those strong XXXX continue outlined Business volume strategic earlier. adding Marc

$X to that January. lower net $XX paydown non-operating in the the adjusted $X.X below assuming includes in million Moving XXXX, mainly be completed due expect due to billion million about we lower will This line, income FX. interest million. $XXX of other It expense is to be changes debt approximately we the debt. impact from million, lower We're by net in XXXX average net than XXXX $XX

capacity XXXX. The $X.X billion income primarily expect by rate of $X.X benefits increased assuming XX.X% approximately of in tax in investment over tax capital of growth, cash $XXX by flow pharma Free be an XXXX be is in driven billion. midpoint tax increase our $X earnings expenditure million by increase initiatives. expenditures primarily offset year billion in our expected planning from represents our We're XXXX, the investments. and by over adjusted bioproduction, is XXXX. to is The net approximately rate driven improvement Laboratory prior expected to biosciences the to capital XX% capability We businesses. and The expansions Products partially the driven services,

and $X.X be of includes completed XXX any guidance our This acquisition shareholders buybacks, approximately for of of share European we estimate in divestitures. million $X.X which share deployment. Our this million We $XXX does million consists or future vector it capital average guidance count of the capital shares, will full and assume Novasep's year returned through dividends. to recently $XXX billion acquisitions diluted not of business; year January; the completed that assumes billion viral approximately

not later quarterly include to there And does the wanted to to touch the factors finally, are as year it for of phasing QX. acquisition Mesa on consider. close several is I expected So which Biotech, in

first days half as X in year. the the X in the year. as XXXX is revenue that comparisons guidance for XXXX, a days significantly First, X the in significantly in extra to the I are COVID-XX and of first Then resulting note And in easier fewer included more selling the half less the response in of year. initial weighted reminder, full QX we the day mentioned have earlier, QX

to by XX% expected factors, in we're half, very total into organic of dynamics beginning the with QX an of in standpoint, similar growth in execution the growth year top-line And From QX reflecting be year. the taking of profile strong growth expecting to strong the the a of operational from the very and lot expecting then margin, of these quarter, So the of standpoint, half year. second account operating approximately the first a EPS year's throughout all XX% the impacting those XXXX. adjusted we're near-term and

track level, performance EPS growth and high of growth, with X% excellent record. starting revenue XX% organic the we're guidance year long-term of a financial at adjusted our continuation a So

on As over always, to best as back you progress turn our we'll Ken. we strive for the the go look to I'll that, to forward and the I deliver updating possible call year. through results, With

Kenneth Apicerno

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

Operator

Instructions]. [Operator

Your comes from first question Tycho Peterson JPMorgan. from

Tycho Peterson

heard testing maybe increasingly antigen of a into just could I'll from a you the market. Mesa if planning off dynamic about great and -- over thoughts curious non-automated that the outlook? testing start bit that your crowded others that and like we've function [Abbott]. then entering PCR how and drop the work in off curious Is factor an And could materially Hologic to with Bio, test? I'm more by than you the wishing little the best, about I'm on point-of-care years. is you steeper the installed particular. Ken lower all are of Amplitude? implied talk to a And increase scale And base Marc,

Marc Casper

optimistic The there time. going being a a I truth the has question. So of pandemic our to the right? I testing conservative And much is, demand pandemic of be base around that, quarter, after is see base the sight where assumption. And QX. long much see many around the out, off then very made customers about more drop installed in line we're Yes, are played know, the strong scenarios some that this But doctors right? going line I'm if way robust. extraordinarily testing scenarios made we just has demand quarter. Tycho, and right? we second been to assumption. So out, know a to COVID, in plays has frame the I are assumptions, the world, demand for assumption sight is above the the going strong think to year somewhat or person you'll think PCR So really than reasonable that as see to thanks the well And patient question, first there's we Amplitude want not the have a period an the form quarter. robust way our to to for and going of in incredibly whether first you don't or more

capability, very strong the get and is is that about growing, Our PCR saw is momentum been is a leagues to in you you we you in think confidence relevant rapid that's example. it is using nice standard. adder growth are way and accuracy pandemic gives installed result obvious would an been we gets with number super And Pharmacies The exciting, that is applications and the technology QX that it gold the in truly what accuracy. minutes relevant a expect. we you the that sports a technology. have PCR And that of think have are to Mesa base this about XX When we've Mesa's right? be and the very the testing the learned thing. that throughout there

will those examples to and it additive be this guidance at be capabilities. will is, of that So It's point. in assumed where obviously our our not

Tycho. you, thank So

Tycho Peterson

margin XX.X% margins, And the then one follow-up understanding on operating guidance. the Stephen, just for

of can expect gives COVID seen past eventually retain think you in the you think the year? the of takes uplift As about about margin maybe much and COVID we the to you've over talk off, around wearing how terms some we just as tailwinds,

Stephen Williamson

Yes.

other same of revenue I a are margin roughly and as I in combination kind QX timing margin of drop lost this then in QX the So off embedded similar when the from testing XXXX and quarters think of of terms of guide, mentioned, to about profile that's investments. contribution the X the It's profile. then the

So you indication. that gives an

Operator

Your de Bruin next Derik of Bank question comes from America. from

Derik de Bruin

the early wanted for would Tycho's there. to do you a don't earnings investors the lot -- can It's in given for but that incoming this lot Ken I talk guide to And just of the not question great. mean now know how over about And about of Raf. of were, sort to most of Thermo I'll Stephen, has that God, flips able extend I investors XXXX? can to oh it for in I -- comps. all And I morning mean if looks initial realize earnings. certain of a case going going well, I follow from on these say, extent about potential create the sort how XXXX. grow up congratulations They're end and XXXX, they the huge talk just think you 'XX my to thoughts I on comment tailwind. growth any that's and question of for XXXX? What answer or difficult too calls not really from my But be really my are, COVID to I XXXX, to this all Obviously, uncertainty. the questions incoming of a it's --

Marc Casper

the and it's this around So year's the guidance Derik, one I've on I've very it's -- I've been been been one the but a a around well. never question as opening at while. fair one is a next great one, that

growth business, in accelerating following: New about way about the very because And we our because put throughout the reinvestment opportunities stepping was build. during $X of the every drive right? company we've substantial in to how of think which were the we is way the right, the we And the year. dramatically I increases opened rate flow the we're solidified think relationships financial normal So pandemic, were the while earnings of in above First, responded, course XXXX, the managed able cash have XXXX. it of that the business in reinvestment and the up additional year of that billion because we again performance,

base good activity. off of that kind So It going what the of And are does future? we grow applications. investments that to And made other the company to COVID more the much are that drive will obviously for that earnings be increased means rapidly. business supporting of to that that applied mean positioned is

point, to less some therapies we be And converts continue that be But very that relevant. to non-COVID-related in over XXXX. at obviously, vaccines they'll will activities. all expect and So relevant capacity,

in satisfy customers. QPCR installed we demand that's On capacity base of creates the straight-through Others has We have some been manufacturing able are year And diagnostics were base even increase the couldn't importantly, the and because the do because reason diagnostic supply to that with The that right? larger COVID to in course molecular flat installed sample others. up, industry We during is relatively increase for about year. the opportunity business. prep others constrained increased they build side, in of the results the out this more our an level-loaded installed hugely the talking molecular so months. the in get

we'll to growth excited XXXX, bullish we're see as things. it our about of prospects. obviously, what the gets company. is, it is, economy So much long-term all what we'll closer the prospects I'm figure of But And those extremely about the the out. And

Derik de Bruin

my done it's me know have -- my conversations. took you what already you already sort you for this, molecular of a answered I But lot diagnostics of lately Great. question.

off one And would So follow-up. CapEx fall I not in -- to beyond, and sort we just that a XXXX have XXXX, to clarify, 'XX those right? spending. in expect of That's level quick just new CapEx the base step-up levels

Marc Casper

wind back we really add, them expect the Obviously, No, that and our over of support we support it would the obviously growth. step-up that expect step-up if I opportunities start would materialize and long-term think new acceleration Stephen up, in will there But time. -- returns. are to come the to down further the XXXX the in we'll because effectively, 'XX take opportunities

Stephen Williamson

Yes.

X.X% long-term of I of the profile way about kind now. think It's think good company is to it's revenue of X% to about the right modeling. around a long, a really

Operator

And from Jack Meehan Research. come will Nephron your from next question

Jack Meehan

deserved. also, Ken; Well Raf. congratulations, And congrats,

to into wanted bit So dig the more. a little guidance

linear So obviously capacity the seeing scaling revenue around we're year, XXXX. therapeutic fairly the into assumption for vaccine vaccine throughout the manufacturers though

color that around takes give any the there behind could throughout year? more are framework So assumption? bit a you assuming just the And little you're the

Stephen Williamson

were run already rate that QX. framing we So is in I one think at

a of with continuation seeing how of out are. we is play year we're So kind where this the

about of take? level support part high you for customers. question then very a the last And of can the just your So clarify our

Jack Meehan

any off there projects think the you Are Yes. year? drop that throughout

Marc Casper

mean will obviously be therapies of or a of work vaccines always those I -- which we Yes. some unsuccessful. supported have development there's of lot

but.. conclude, projects those So

Jack Meehan

that. in Embedded

Marc Casper

number, the ones demand the the in Embedded successful increase. but for obviously,

the rate we're exact and products same kind going throughout be that of ebbs at not flows. It to So run year. is the

Jack Meehan

I then to to analytical And Great. wanted instruments. turn

-- months, some of are the for -- X And months the looking first can demand in XXXX? XXXX, second think Could half? then what throughout catch-up around maybe translated you purchasing As reflected how over have been does the year? be you you the last forward, assumptions do segment versus there your how could X that

Marc Casper

Yes.

the of disruptions instrument of the there So during very receive of substantial in customers' demand profile, part was or an obviously, the terms the and both order first even to in obviously, up ability other year, is the all activity stronger spec brought. at and our that which analysis, to pick microscopy business. largely We start saw material our a challenges mass level, chrome and pandemic much business electronic structural and particularly in

So QX, the soft, regards. though bookings those improve. did we're still is strong analysis Chemical in

company strengthening and the grow average. how above would I would about analytical I it. is continued that That's would see expect what year, instruments you'll think that So this

Operator

come Cowen. next from question your Doug from Schenkel will And

Doug Schenkel

into Before I best once stage. Ken, again, wishes the next it, on get

deserve You congrats Raf. best, to the all and

the you have Well, We least about and both on enjoyed you with working working and beach. with hearing always what both. doing at is Ken forward Raf to moving forward look

to the which QX guidance. is, conservatism is around of seeing parts of business? growth rate which related conservatism, in growth would a you your of Or a early the assumes certain COVID-XX topic also this some rate headwinds According you characterize well How balancing is again, growth growth embedded below X%. guidance base XXXX with implies our first X-year restrictions rate rate. typical your X.X%, target into year stacked is increased to kind for So XXXX of in the on maybe this business guidance? math, longer-term just and core

Marc Casper

Doug. Yes,

what's pandemic. the fourth the is for when still about there's the from on So saw we think of roughly business, to from growth full business going I in level year. assumed the implied quarter about based in that And I in X% the the in growth base there step-up base for feel the disruption right, some growth full good X% QX year,

Let me just visualize it.

right? don't see I feel we that's are in above But there's Our that good Specialty if Diagnostics a business recovery business, a well as it's the confident still scenario rate. that you at parts routine see while. where X%, are scenarios And down, doctor So for out. not the still only of plays business So growing that right? the

satisfied. So I do job? to we I of if go if make gains, know to us the we're the going appropriate in more a that So we're going end then everybody if to at don't industry need you're gaining else we did we not, market start. than did market share. how don't then the And and there's year, look reflects -- at we're see know sure to I think it's measure going if great or ourselves an X% share be the opportunity And faster that, conservative report, it. deliver but it's to

Doug Schenkel

That's in this some then to for fourth spending? of me quarterly just for And let rate a over in actually in -- some be how at guess China? then large in least the impacting see to prepared would last on the And And molecule of this growth think you me I the and pivot looking about China. investments prompted China China years, growth I past China remarks, prompted the to quarter. embedded made helpful. growth. benefit which Okay. the guess drove -- XXXX? I in you strength some the Did part China strongly what's curiosity catch-up model are growth Actually, I your in rebounded your comments represents decade we were back What basis. highest our in

Marc Casper

Yes.

first was growth year, XX%-ish organic growth good it obviously, see, to in China, XX% the and of organic half So disruptive QX. QX very in

There I to catch-up and getting those QX definitely very all some back was things. mean, right? nice work strong. and obviously, customers step-up, So was spend,

there growth, our excited quantify stronger China right? prospects one right? in be And pretty that's we're was fastest-growing bookings is. But So in were revenue for some geographies than exactly there. for about impossible So So this China growth to much of that that what should XXXX. year, the of

expectation. the be would that So

these and about the emergence and we the become calls over that larger of of Chinese I'm market able and of to localize our time. lot base. to very talked for terms the at customer produce for single-use about partnership local excited supply. And a years, excited reforming them base biologic products. we're and we've Hangzhou venture were biotech the We've on larger large technologies has substance and customer the drug local over a molecule, joint done to job give In industry a capacity that good same biologics drug serving the assurance in point, actually the support

we're So growth. of is well there. driver nice positioned And biotech our a

segments. in the other well. in growth and also We Academic was as saw quarter quite government strong nice

you little a in of China I looks hope what outlook gives that the bit and for a what like. flavor strong happened So

Operator

next question comes Your from Evercore. from Vijay Kumar

Vijay Kumar

accelerating. installed the Ken base, a big Raf. the that question for Is a higher biopharma should or Marc, been view there to from emerging Congrats is base Some of feedback perhaps and the accelerating maybe picture gotten be you. getting we've business has pandemic? stronger

perhaps changing what the X was pandemic? math So base? LRP thoughts that pre-pandemic know the some to more on business the emerging I from itself LRP that because X. Is is the stronger

Marc Casper

Yes.

the Analyst thinking about which for well the we faster-growing that, and pandemic. opportunities question. as guiding pandemic positioning we run what new and as thanks think QX market. Meeting the But end And to the us is set pandemic, just pharma and I really yes, of continues a the exact the brighter in call grew, opportunities back way investments the the figure the longer numbers the in exit to out That's to about we're the will a in how of starting over think and fastest-growing biotech the decisions, market our I were -- principle that phase it goes make And about increase. in term, company to ourselves up and -- created percent time. company because September We our business which our company than heard for when new created right. through the the Vijay, you've talk So we're And about about is have the future.

the in markets, strong market-driven our average going type very But So the emerging increased all proposition, forward. weighted drive those growth. we're innovation, value that's a things investments in help making investments our growth will us

the share into So long-term I'm for bullish prospects about accelerated long-term. the very gain

Vijay Kumar

assumptions of $X of it's billion flattish billion-ish, cash one-off guys year-on-year. your don't that's free to And look sheet. billion, the helpful. the for I $X had at -- you're curious consecutive the $XX cap plus balance years year, sheet If has plus That's -- flows. perhaps The on considering it generating. $XX on plus cash And I'm on Any think slightly X ever sort why one you close free up billion to guidance, $X perhaps any why cap $X deployment balance thoughts the just I have billion? on Thermo And items? cash of is lying deployment? billion about

Stephen Williamson

the let Vijay, flow. clarify free So on me cash just

very I significant includes increase think that in CapEx. a

then I of year-over-year, So deploy XX% that's growth large is opportunities And if chunk to cash from great terms in these look we're you towards think that strong. appropriately operations, a strong about of which and CapEx. incredibly choosing

market capacity. cash the So -- billion of that's of in kind $X to the free of and terms flow you get the

Marc Casper

Yes.

have even have talk that about 'XX talked we in company deploy firepower. levered. I when 'XX substantial when about models. active gave our with them. we numbers now numbers stagnantly back would We seeing large. that us And when And are of we where think or be we bolt-ons. were have X-year lot can the more you're wherever today, when capacity billion these we always a is So historically right the about $XX are had We And we've

to and return to the we some billion of we're busy good of get buyback. mean going don't the It pipeline, good completed think the very We'll things capital I that pass disciplined. this of with of going we're right already are a some stewards $X.X have be was do year We'll things. We to be capital. right.

be the us say, to and you're at or over the able don't look But in year, would a nice x to strong have time to initial and particular y." guidance. deploy "In that to we be So the you expect any seeing capital calendar I do that financials adder

Kenneth Apicerno

one Operator, have for we time more.

Operator

Okay.

be So question today will from Brennan for your final from Dan then UBS.

Dan Brennan

same looking have quick going our here. thing walk. to forward look jets obviously, you things Marc, working up with and of The for great forward. Raf, are And with Ken, been plug, best a

a far. So wanted I ask to here addressed on I thus few first and comments question a you've vaccine therapeutics. know

breaks looking this XQ of through can revenue discussed to addressed the Derik's billion cumulatively at and 'XX on And this I us of Any opportunity. wondering help durability. billion through be pieces, kind I'm pretty 'XX. outlook think help business last think you call, I of the way just you a there's down between presumably, opportunity going some your this there's and tools and you're to a Obviously, lot us to that $X question, $X on if decent of [PPI]? guiding know color but you tail think how moving for the 'XX. 'XX, it vaccine

Marc Casper

on things best at a we the the were Fisher. least thanks years. of focused for question, jets, of not at Dan, lot and the But So Thermo

pain So the I too suffer didn't much.

as outlook about So numbers articulate kind our of create when hype what around and and you know, the which a lot therapies, can on think I vaccines the of and is you don't see things. philosophy,

and So to was year. for to the billion in even all $X.X more upcoming That of revenue and be what the year, this customers as 'XX vaccines committed demand it that when and some 'XX we with parts revenue we maybe talked have contracted this on pandemic position to, months we continued, year, we billion opportunity total, last of we saw. us, as the what of even started would it continued, about would our we pandemic out expect billion won see the into $X to because and And very zero more went and therapies substantial as what billion COVID-XX our did right? telling going be ago, we are based end longer. we some $X in business, at Obviously, $X.X likely if level

to on our of services bioproduction based capability. the contribution be and our So pharma large business it's strength going a

for the question. you thank So

Marc Casper

me here few things. Let wrap with a

you even us. First, updating done retirements. opportunities and you we're thank everyone. the It's we looking Thanks, all and wishing a more you Fisher excited for the as Ken, expressed colleagues, ahead job course ongoing thank of behalf analysts company year on incredibly for of happiest about all and support exceptional forward From always, of of We're our of well the an XX,XXX to you during been a Thermo of as perspective, delivered XXXX. Scientific. And your awesome.

Operator

will everyone, Thank us conclude conference you, This for call. joining today's today.

You may now disconnect.

Thermo Fisher Scientific (TMO) 1 Feb 212020 Q4 Earnings call transcript