TMO - Earnings call transcript Q2 2021 | Thermo Fisher Scientific Inc.

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Operator

Good morning ladies and gentlemen and welcome to the Thermo Fisher Scientific 2021 second quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

If you’d like to ask a question during this time, simply press star then the number one on your telephone keypad.

If you would like to withdraw your question, press the pound key. you. Thank to for like call, our introduce would the moderator Mr. I Vice President, Tejada, Investor Rafael Relations. Mr. begin the may you Tejada, call.

Rafael Tejada

and us. morning Good thank you for joining

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

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

second of you with measures in financial this rely the of I’ll principles, GAAP subsequent point these press heading, Investors Financials. the the Marc. any to to will of if representing the turn under today. release obligation any While is as change, that, reconciliation referring our in also even to and to we we update over disclaim non-GAAP be as available measures should prepared Also specifically to not XXXX financial generally views on the may these future, earnings With do directly quarter certain we measures at or not in call most accepted to our accounting during date section statements statements A therefore in of website GAAP. call, elect the comparable now forward-looking our our forward-looking accordance so, some estimates

Marc Casper

Raf our you Thanks everyone. quarter and morning Thank joining for today good us for call. second

both As you to growth on line. deliver executed QX press fantastic and bottom in our we quarter on release, strategy saw the in another with excellent our top growth

exceptional three deliver financials. to initiated speed of our to and enter on I’ll us to let the our half factors seeing well fantastic the These our power business first, As team’s operating terrific my exceptionally in cover enables XXXX which these performance. me a of our system, but first in accelerated in the as remarks, the already and me: more and stand we XXXX. XXXX; investments I we first topics depth execution at each of provide with recap we’re the the PPI position share; second, out momentum third, growth reflect three of scale gain strategy year, things benefit on deliver

QX in Our $X.XX billion. grew revenue XX% to year-over-year

the Our and billion margin points second $X.XX operating XX% expanded adjusted income adjusted XX% XXX to increased operating the quarter our to for basis for quarter.

Finally, $X.XX to EPS we share. quarter XX% delivered per another increase adjusted a exceptional achieving performance, of

response. fundamentals the see in excellent and globally, life conditions Turning strong the factors: economic to by the our our industry end markets, in robust driven sciences, we pandemic three is continue to role playing activity

businesses our leading growth customer had pharma conditions, underlying XX% performance of benefit market and and and unique biotech, outstanding mass excellent our across role spectrometry, exciting in Our strong team Starting and excellent our customers, areas, with bio sciences, competitive of and gain and to vaccines us has across wide in position our We another pharma execution outstanding supporting including chromatography all quarter. our research by channel. safety bio services, of our allowed saw share driven these in and deliver market growth the we over unique a therapies. role customers COVID-XX serving and therapeutic significant including by range value proposition, production, with

businesses We We are these customer academic this supporting over we’ve trusted electron especially saw in bio base, from across clearly safety years sciences, our very channel. XX% microscopy, that government, and benefiting partner strong with grew market research quarter. many and In earned we growth status customers. our the and this

continues during microscopy approximately and the Turning XX% team and at spectrometry QX, growth In chromatography we we industrial had a to capture strong electron the quarter mass execute and opportunities. as applied, business. to in to grew particularly level high

and in the we pre-pandemic high our levels. the Finally diagnostics demand and in seeing healthcare, teens grew we’re during base quarter in approach business customer

products transplant immunodiagnostics businesses Our COVID-XX $X.X related Also diagnostics diagnostics and and grew for approximately to growth. delivered testing in healthcare, billion. demand outstanding

played end a in delivering world. bringing on up our critical COVID-XX around half total recap response of industry $X.X billion. wrap response for governments with solutions our market and to diagnostics in me the have societal beginning quick our the role Since and the role In largest the the pandemic, quarter, life a we first $X.X the second response. and pandemic the tools the we supporting in comment customers of Let the science revenue generated billion,

future. gives to company the of and activity the the investments it us position our phenomenal of accelerate a benefits One response for ability is

remain success. on across pay we reflect This with colleagues You contributions capabilities measures invest colleagues. products new we special the to again weeks’ know of we is last are a non-executive and employer about are recognition Building to continuing ensure are we the our year, to and providing sciences incredible of payment our capacity, life many to two one to choice just the the of industry. taking additional we also investments making, all the that our additions in are

on high customers. impact leveraging we launching value pillars: to products, on to new high proposition growth scale Let is the markets, and in great unique delivering innovative the emerging our QX a our based turn strategy, our me three made and which in progress growth

me Let with further of our scientific to start few a new accelerate our We businesses and innovation. a customers products give to number industry launched enable breakthroughs. examples. strengthen across leadership I’ll our you

technology launched smaller several products memory microprocessors advance more and new including business, sorting analysis. sciences ramp powerful compounds. complex tool me electron very and dual to to In tool X production business, Attune of cell QX, the cell we biology. researchers bio highlight offers from cell Labs and instruments The important our In Thermo introduced microscope, chromatography industry-leading Scientific efficiently to Propel platform understand small metabolized a customers better semiconductor capability the based Bigfoot wafer few. in Let to mass Flow microscopy a In Scientific for and accelerate a new launched complex we other Invitrogen Spectral scanning the analysis CytPix therapy enable mass which help of to electron we Spectrometer, on which and is Thermo devices. acquired EXL Tribrid extends molecule spectrometry, and cell Helios the developers two Sorter Orbitrap our our IQX Orbitrap Invitrogen new we beam further up enhanced the imaging spectrometer impact more

emerging excellent our second growth the markets. customers Pacific. for gain Turning strategy, in pillar This experience and has to of continue to outstanding scale share our the leverage delivering contributed are growth we to high across an to we growth Asia the and create

we up country’s support is the Let the ramping speed the in sciences cover to demonstrated highlights. to response delivered quarter. me we in the couple team at India, in facility of under XX% PCR growth scale shipped The use millions COVID-XX China, facility single our Bengaluru strong our which a In technology of of In at just Suzhou. tests genetic new pandemic.

contributed control. India urgently the donations million have products needed $XX also to and We under bring crisis in help

creating and significant Our a demonstrates markets investments experience made are that the growth. differentiated performance region our for across these customers the we’re in we’ve fueling that

goals. exciting help year, see proposition, continued of we’re billion third progress significant capabilities them on our to growth $X.X to and value investments. our these to further of our investments executing is expand in an last to our we Building customers in their capex increase achieve the partner capacity The It’s capabilities. on our even continue XXXX over capacity and better and our be and for pillar customer strategy

customers production as our in in to for value adding materials to used an and customers’ the For Lithuania example, proposition commitment on their additional of the lines These partner fill/finish quarter the who demonstrate investments vaccines support work. mRNA essential during sterile therapies. our single include in we expanding North production Logan, technology and facility brought These and to Carolina, use the Greenville, of rely around vaccines. in capacity in capacity site our our Utah, Italy our us world essential online our in raw

leading number combination us value our academic of During centers. proposition medical customer forward. announced we unique the with science quarter, and to a The move of our collaborations positions innovation

For will clinical work mass insight sequencing, for collaborating clinical to leverage more technology Mayo our autoimmunity, monitoring. personalized This cancers, the example, and next-gen we’re diagnostics develop blood-based with and therapeutic precise and Clinic spectrometry. drug and in allergy, immunology,

manufacturing ultimately In addition, center University we These to new announced for cell gene capabilities innovation and advance at and a of San therapy. operate the partnerships customers cell and for patients. outcomes collaboration lead California will in therapy to state-of-the-art Francisco and build development, that we’ll our better

QX. during to a discipline bring so at our business system This can our even to us scale, PPI helps to all continue a mission-driven value our innovative and efficiently stakeholders. our with more we success and way in customers, effectively, new of solutions find our and speed major greater always, create work for operate As better culture every day was factor more

integration will deployment, as quarter. of clinical in establish services the Fisher the market. and add high growth we announced acquisition world-class services This I’ve very is acquisition at beginning attractive of extremely I’ve Turning to met the PPD end plan and the impressed research the The leader Thermo with the a capital well. fastest growing been industry integration for planning complementary talent process. during highly going our

colleagues closing We’re welcoming Thermo to our the looking Fisher upon to of transaction. forward PPD

ESG guidance, on Before on me let you progress our turning to update initiatives. our

It As serving commitment This a to operations advance to that we by to know XXXX. gas leader make in carbon we our better our by Yesterday, place. emissions on responsibility the do achieve work customers our greenhouse world goes shareholders. neutrality our we our To our beyond to goal XXXX. enable our to role extends value the reduce initiatives. science, to create builds world our and across for we end, announced existing that sustainability continue we the

our to moving mission to customers enable enable We’re more aligned their while this efficient, energy, the customers and front our use also our by and the our in business of meet reducing This energy on cleaner with right portfolio renewable sustainability to operations facilities do waste needs. making across forward increasing make way our to healthier, our to safer. commitment to and world is our innovating fulfilling

first guidance full full turn cover our guidance for Stephen by confidence Now start for let the revenue highlights. in I’ll me the we’re outlook, the strong raising our very assumptions to behind earnings of the our cover the half both year Driven the our and to our and XXXX. will year year. guidance,

billion, revenue raising We’re $XXX over XXXX. $XX.X XX% which represents reported our by guidance growth million to

In terms which EPS, we’re growth by $XX.XX, our of XX% $X.XX represent guidance will adjusted over to XXXX. raising

me to takeaways the QX. summarize Before turn I call our from let Stephen, over key

an doing position. growth our strategy team executing of our to competitive is Our strengthen proven outstanding job

enabling ability with business scale. at system PPI is Our to our operate speed

and well extremely gaining share. performing is business Our

deliver to and All momentum us a first and deliver XXXX. of to provides us terrific we enabled XXXX, half enter as this excellent fantastic positioned results

to for customers, quarter. and again company, dedication like our delivering once excellent my XX,XXX to their for I’d thank Finally, our colleagues another

Williamson. to Stephen call CFO, the over turn I’ll Stephen? Now our

Stephen Williamson

organic Thanks We our Marc begin summary including a QX everyone. and XX%, had good growth. another quarter morning our revenue and XX% high performance. level excellent with I’ll of grew

strategy our is market us on share take As Marc of enabling top conditions. growth strong to mentioned,

were $X.X to As a generating billion revenue and response growth COVID-XX result, in the quarter. QX our deliver organic in of in the to the able continue industry-leading we response pandemic, business XX% base

generate to to us really enabling very excellent line growth is PPI through also strong on business the growth investments. and Our on our pull us enabled system top significant well execute

$X.XX to flow a grew billion by delivered free overall, of result, cash As our excellent EPS $X.X quarter. XX% we adjusted in QX - another and

the GAAP more me XX% color up year. $X.XX, quarter QX EPS let some in last QX was from Now performance. on provide the

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

mentioned, growth I base As organic the was business XX%.

Asia XX%, the during quarter, by Europe and just Pacific under of XX%, geography the grew grew and performance double North world digits. our to America low XX%, China Turning grew grew both rest

was performance, enabled adjusted and quarter, QX operational QX from business operating basis our to to year. and productivity. deliver XX%, us last increased income contributions PPI strong XX% very Turning points the margin than XXX operating higher adjusted In our system volume

our the in also to in cash We similar colleagues, amount we supplementary $XXX favorable offset the continue to extraordinary non-executive the partly quarter was investments that term a and and support communities growth. our ongoing had bonuses near businesses for of business strategic the This investments by recognize shareholders. customers, to million in across and QX. mix. Included our our long the over recorded do for is is work This colleagues

capacity ensuring and Our for and ongoing capabilities our in really a future bright company. are the investment colleagues

year. XX.X%, gross QX prior versus XX.X% the XXXX a points in positive the This strategic decrease Adjusted quarter, was productivity high of in $XXX flat at by representing was adjusted offset innovation revenue, increased company total we quarter to fuel P&L, the in of future approximately delivered XXX quarter XX% and reflects the had of growth details and mix. the QX growth. business million, was impact SG&A basis came the versus expense XXXX, in investments margin Total strong to the In of leverage. of onto strong volume investments. R&D reflecting Moving QX

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

versus were by million option in driven due to X of Our about net dilution. increase last quarter points share adjusted year-over-year tax million QX XX%. was shares rate XXX in was diluted basis the the pre-tax year profit. This in XXX lower QX, repurchases Average

very investing and first XX% PPI we’re cash in quarter. free that’s to continuing year. from billion, shareholders our the period $X business term. XX% billion same capital the in $XXX $X.X Turning sheet, period making last for net system same flow flow to billion after generating reflects cash dividend strong the the flow increase up long in and $X.X the the short ended billion, of This XX% cash the $XX.X half the strong total debt. Year-to-date the and was returned return up was the of enabled This year. the and cash We was balance announced over of dividends last by in investments flow we the expenditure. performance in operations million February. over we’re reflects We cash $X Year-to-date from term billion year, with through QX

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

four products recognized revenue. profitability specialty of levels response and based impact From segments solutions the some provide our the some across the COVID-XX our response and I’ll margin I’ll three differed last to on life the performance diagnostics. standpoint, revenue a the as science the of the on the on segments. majority services revenue framing with of business impact color last COVID-XX the different with a on of standpoint, thoughts start laboratory From recognized revenue the segment in remainder Now the was that the quarters, case results. the Similar in few quarters, is the of scale in response on and of COVID-XX

we of across the those make during all does to that our of The investments align continued does investments segment, businesses. strategic in not necessarily addition, skew each segment reported margins. revenue the of response quarter with some size COVID-XX so In the

organic increased basis was adjusted growth sciences through segment up mix, investments. exceptionally with the operating the saw year drove adjusted onto were pull and margin our XX% strong solutions over and delivered Moving In QX science business quarter, strategic income we growth we and strong in XX solutions, and XX.X%, sciences XX% this starting In which year. segment in volume the revenue businesses. production details, QX bio partially reported was quarter, bio offset XX%. by in life operating increased the points life positive

QX We also segment, tailwind this a and was the XX%. FX QX. had on segment in increased XX% margins growth from in In instruments in revenue reported analytical organic

over basis excellent XXX operating adjusted XX.X%, saw businesses all analytical quarter, the in QX we in was increased within this instruments operating year points up During margin growth year. adjusted income and XXX% segment.

During the which offset we’re and more and making quarter, we that strategic productivity, than segment. investments through volume the this strong drove very pull across

to in reported Turning QX in growth diagnostics, and was specialty XX%. increased XX% organic segment revenue this

immunodiagnostics exceptionally volume and growth the increased basis continued margin strategic delivered favorable by businesses. year. were income offset we from leverage XX.X%, transplant In and Adjusted QX, quarter in During the XXX QX, diagnostics investments and in strong the was adjusted than prior mix this business operating positive the points down the XX% segment. operating more in

growth Finally by and growth services guidance. we let is [indiscernible] higher which the our the quarter, offset was in basis businesses XXX XX.X%, and mix, to XX%. segment saw business turn in in was and delivered XX%, year. strategic increased the prior me positive our In excellent that, adjusted that segment. XXXX we points With Adjusted investments. now income than In volume this leverage organic the favorable the in products operating operating quarter margin partially updated reported increased QX segment, all XX% revenue was and

our half adjusted business the a EPS the and stronger guidance, base year. for the performance raising Marc second of As we’re strength revenue reflecting of with outlook in mentioned, along our QX both the

by revenue, full guidance by and to increase to we’re raising The million driven organic more an for $XXX of base favorable in increasing X% FX to year year our XX%, business increase terms COVID-XX for organic an assumption growth slightly guidance our updated tailwind outlook three factors: full year a revenue XXXX, $XX.X response revenue assumed. is billion billion the X%. growth from of of than in $X.X the full previously and In

growth each half business, second you $XXX give points outlook the our our increasing basis factors. we’re growth This the details the by year outlook increases here in stronger business XXX additional outlook million, a reflecting with on Starting performance by me full base year. XX%. XXXX organic QX for and for the great Let these of base the of to

Our strong end investments very on executing to our drive and we’re markets well strategy very excellent and increased are performance. growth strategic

our of of in response Moving in from $X.X the the related prior million and up billion therapies half now was first COVID-XX in XXXX, role revenue, and the recognized guide. Approximately expect year. vaccines onto supporting half $XXX $X.X to increase COVID-XX continues we billion revenue that

Given outlook the therapy by base the and business $XXX the lowered strength year of revenue prior million testing. for revised taken guidance. response, related the both from opportunity to growth We’ve vaccine we’ve significantly guidance this testing the our response de-risk the and full in

the intensity, we’d opportunity pandemic case, will need well the was prudent of go scenarios this support half. We’re over $X.X but our billion could higher now half take customer a dollars first assuming thought billion outlook. a There it the leaving be was for benefit be the for second to it in to of a driving just where to to Should through which we will the P&L; the positioned year, continues year. outcomes be in needs wide that in and to the the de-risk XXXX, of are testing. range in increase half flow now, of second back be delivered There the testing for for $X.X billion

and increasing guidance $XXX is an the XX% be those tailwind up different result from the to then FX. just margin this by $X.XX assumed prior prior fluctuate. which now FX profiles annual in the adjusted third guidance final revenue million, I’ve account The of over revenue and element guidance the our to is year, changes went The revenue $XX.XX, increase significantly. Taking million raise EPS $XX for is Rates of to the of continue XXXX. guidance. for They our net QX of will which we’re to outlined, moderated in result of our versus favorable most growth

With XX.X%, margin the the we for the line guide, be full in estimate revenue with approximately year operating XXXX. the mix now assumed would in that adjusted

The remain same other the guide. elements guidance our as of prior the

operational those an Let from in me get of some you XXXX remind date, the any assumptions. actual XXXX. we of more acquisition estimate impact any of included we’ll benefit clarity close potential of the in on We’ve When provide PPD. not

We to be expect net interest million. expense in $XXX XXXX approximately

as $XX reminder, the included for is within pre-financing adjusted EPS PPD of As that million or a $X.XX transaction. number placeholder a for

tax be rate to in We expect the adjusted XX% XXXX. income

of We’re billion $X.X to approximately assuming free billion, XXXX. net $X.X capital flow cash and in expenditures of $X approximately billion

We Our and deployment, guidance share still includes to shares. shareholders full XXX capital capital M&A, billion diluted returned million dividends. is $X year billion which $X.X $X.X were completed for through billion completed be of count average which buybacks the QX, $XXX in million of share estimate to of

the we the second QX. Finally, are results year. of to the touch revenue adjusted to QX EPS split between will assuming When be wanted for phasing P&L about remainder half and QX, that of the the of think weighted the and dollars slightly I I on

XXXX Raf. PPD position split, we placeholder goals second I’ll delivered As another think conclude, the back to excellent of in QX. you turn the and the in financing as to quarter that, is that year. achieve To all call move remember our about into great the we over for half we’re With

Rafael Tejada

to you we’re Operator, ready Stephen. questions. take Thank

Operator

of with [Operator the instructions] Your Kumar question comes first from line Evercore. Vijay

Vijay Kumar

coming it’s a were on math Marc, response COVID morning. by back but base increased segments revenues for year, to implied lower in assumptions, better? for congrats curious, implications big the the the what Overall come by guys, tech prior Clearly know, all here. be and half. the that’s contribution. and is in solid I’m revenues the curious in one That’s any changed saw on number, up, are better, analytical ex-FX I’m this million of it which most a ’XX. $XXX XXX here--you if were and guidance on Hey [indiscernible] XXX it we up versus your has seems million coming fiscal

Marc Casper

thanks question. Yes the Vijay, for

XX% base look business dialog business outlook, really I is very incredibly cylinders, As strong. have firing organic QX. were business base really The the on bullish the at with conditions growth, is and importantly, you and strong the performance, and our the The about role very full informal feel about orders customers market business us also, in we year, base gave our them, that. really that confidence for supporting that activities all more appropriate XX% organic guidance for growth an good so is

strategy the benefits growth of in the of second investments we You’re our last acceleration year. the started that half seeing in

the You’re into It’s new really what for base time, outlook terms we the and products a that we’re seeing come start new launched, of is business. capabilities. the fundamental to about super those exciting the it things collaborations, excited in

Vijay Kumar

mentioned out, time Stephen, on expected it Understood, us, and you you into the gives the half, in was extra comment do curious, one in it’s any dollars I’m of that visibility think I margins tenders for maybe used pay. numbers? to the so continue two here, was those I impact, de-risked, billion and is you that the What of think orders or have for one you testing think and called back I a second half? weeks

Marc Casper

and the talk margin, the about I’ll don’t testing. you why do Stephen,

Stephen Williamson

the our is in year for contribution consideration points brought margins think different revenue taken the prior mix XX.X%, it profile down we full margin from into basis the XX of change guidance, down the the about I’d guide. when changes. which That’s Yes, to about mix in of down kind of my assumed what in about

Marc Casper

response given and much of given equation, that had felt that, We the at the the things table the so in we’re $X.X just and If demand a off the to number going felt well drive around took noise, actually the second we testing, you orders felt quarter, be the of do, for capacity. like billion good dialog testing, generally obviously felt much then for just a right around strong that to half. know, of de-risking the actually, continue assumed we the the how number this that we is revenue like to of we’re as reasonably we have relationships there and side Yes, and and We outlook. on and testing thing more terms testing strategy guidance. positioned, variant in higher about delta than taking our

Operator

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

Doug Schenkel

Hey me? you hear guys, can

Marc Casper

Perfectly.

Doug Schenkel

on call Okay, guess think technical sorry about going not that. I I and difficulties. had we question know XXXX, I’m to about as you’re I to a for-- some guide this and going apologize

Marc Casper

Don’t apologize.

Doug Schenkel

going at I thinking line, at construct at targets the lingering in down take there PPD that the then of to not COVID-XX for to for add point? relief construct components mean, just up EPS bottom three-year layer and chase, the and top just we’re and cut to about those XXXX reasonable boil some Is use model basically in a and to maybe to whatever But take as that revenue and analyst from level, three them end, the kind and it your revenue XXXX? add it high any is day at this reason mid some to to

Marc Casper

call as Doug, I’m the you some year because would of at it XX the cool thoughts then least - and between going early we the as and XX% to on for that, news, going guidance now seven the growth. think about is some what with ways official I question. give but to day is, to weeks give say, some XXXX, and help think analyst it’s to for modeling, super give going three-year day would scenarios about you the What I terrific the of to outlook would XXXX performance we’re which not is best an be going to thought help We way, business hold organic a analyst we’re think an whatever about base forward. great and now, you know, September

and momentum, be a entering with the and positions order strong book making for XXXX. are We’re momentum strong very in made those us investments more going we’ve that great very to year more of and with

but role that, next off, response, relevant the a will add We’re but I’d like another going try question to to assumptions to I’m knows on going in long be the at whatever do a to perspective, of meaningful so for is but to great need year a their capital from help to to XXXX outcomes super going play demand that, the and PPD, you’d with year way numbers be company. going is say some will for right? our XXXX next and customers be year, vaccines level. nobody be there for testing, there We’ll around range are therapies be what scenarios deployment the seems what what is testing so excited. obviously obviously

Doug Schenkel

Thanks Okay, Then ones quick there. all guess as maybe out Marc. I’ll follow-up, for right. two throw my I that, just the

first I boon occurred to toward seeing that, margin that you into I you labs now? sneak as products. out in about you to come for the fall, to about you are out? at the is volumes, one category. these clearly testing testing, you. four-in-one nicely. Then the revenue revenue Maybe this of move that quite of slowing is at said, underlying I What is infectious globally seeing sites COVID-XX as there where XXXX tracking Stephen, for operating as then XXXX That What I’m that and still Thermo new margins. as move curious broader us in math because guess I’m would these to targets, durability disease been a they’re towards seems wondering, has using would want as do other are any just we testing you know these robust. operating what’s be ton margin your sites, The more take I COVID-XX there beyond we move I but out if able COVID-XX labs contributions help a just anybody, quick, believe real Testing of haven’t. be is well should but Thank built think infrastructure think do

Marc Casper

to free Stephen, we would at huge shot and think COVID is add. what long Those during have be a but around feel say and world. built--we what pandemic we or would and about built demand base two I installed I the good seeing, have When the testing take three-hour are I’ll conversations, it, the obviously had a certainly

season, of driver across all a going is definitely countries our huge in what lot less are obviously we’ll we demand read quite the and testing U.S., of customers a world have the there’s preparing but about is at of of around for demand to activities the For so we for us, are increase, this and the winter activity, bit do a obviously the panel the respiratory is moment, what’s that. U.S. starting although certain and the cases

We’re at demand going need. support our whatever that they customers level of to

it I’ll feel margins, to add, of make you philosophy, of free. the then sort what’s want if terms In and Stephen,

forward. thinking the COVID, not it company how we’re business about the rate the of terms of for the We’re versus manage base in thinking do going profitability company the we about appropriately investment and

kind I’ll colleagues, the you the chose strong right by for right, in and is if we investment $X.XX the the strong highlights and Obviously to in in our do invest appropriately. a really EPS of decision. the the our we’ll conscious QX year PPI outlook million very from first half, the very in our $XXX perspective, system. payment do strong margins of that power very the manage of our--based business are raised it an things additional guidance. that an It the very so and simple - future, one another made We we we math, on think raised EPS I $X.XX

Stephen Williamson

just When line get than that the the right really comes, less to then investment, returns and through that so invest we’re focused P&L you to future. a great--we’ll appropriately it for the future, invest appropriately appropriately then trying it’s top and pays--we’re the expansion for maximize flow on off manage the opportunity, margin number the getting Yes, manage that. we’re

Marc Casper

Thanks Doug.

Operator

comes The Meehan from of next Jack Nephron question the with line Research

Jack Meehan

seem capital it $XX on was through XXXX, I to a could you latest thinking talked market if know, billion Thank you, within us I the allocation good the--you deployment morning. in could analyst the COVID only multiples that hoping give view buybacks? day, not be what’s of you XXXX XXXX. your latest of about go think back a though view there’s Marc, response question deals that You’ve to is more the sales, my than lot since as moving your to higher higher, the of done so ability $X.X close not, the on do if why because billion beginning be and

Marc Casper

Jack, thanks for the question.

In we’ve active terms give obviously an all, a bolt-on We been year. so of we’ve been announced in of been capital transactions, first it’s you an it’s on active. PPD minute, a done of deployment, PPD, number an year active I’ll update smaller but between--and

pipeline quite Our is busy.

do is are we been with of with focus. looking things, are disciplined, to that to right M&A planning. things our perspective, and because opportunities M&A return made the perspective meet at we’ll I’ll and a $X terms because of because the impressed become large the primary continue that capital there to of team we capital PPD, the commitments we’re our in strategy team. the integration board billion of smoothly, the periodically spend continue large as on of and have seeing going number part build a right we’re felt and company. the return execute it’s we’ve so We’re From against mix good. excited did continue the certainly commitment I’ve revisit dividend a of PPD, from very to like felt the to the super It’s our colleagues gotten to moment of very that, and to I’ve M&A fragmented, capital. now, so. But our we buybacks so given industry increasing and we a return,

CRL PPD is that the companies to markets the industry the the leader some see in is well be a that’s to the done. of investment, pretty bit really we’ve direct little foreign good but growth there of got asset. a most From approvals investment the still done, do well. good, is so transaction, you are doing left much positioned, going the As this are end to from a as very the field pathway other super of gotten reporting, closure

way various the the the of capital year, we’re second the through working to quick on that’s a by and We’re request, collaborating around the so closing anti-trust looking deployment. the end filings transaction on with we’re forward world, our recap FDC

Stephen Williamson

and in well, as of ROI, to thing over investments outlook we’re putting about cash as time. how opportunities one of Jack, great that that we to another When I short period the use great in add. so period think evolved back the and put a capex. getting of to that’s I think significantly around some to higher Yes, work identified really returns and invest We’ve cash company’s and time element XXXX, organically,

Jack Meehan

Yes, that. definitely on hear you

Just in or any to was Stephen, across supply a market, the around so had ability your just Marc for curious as as around follow-up either a channel, I thoughts is lever to get going, toggle the how that view, been and discussion pricing there’s inflation a for have issues? lot the chain, you then of any

Stephen Williamson

it Yes, think the large to is at proven got it’s the different recessionary impact places. world, clearly supply and in in when and long a inflationary multiple result I of is pandemic, out. lasts How chain still how the unwinding from be as you impacts pressures look that you’ve for kinks and

be time. it for operating basis some us with We’re will that on the

this our of well through year, operations That’s [indiscernible] not going enables us our really maximize this Our with and expect dynamic you opportunities, scale to the discipline and the events PPI to partner do company, I across across we’ve our continue margins. and system the pricing pricing to navigate as the around scale the our effectively half certain and for use kind then of us navigated run to first to efficiently, just really business so products like portfolio, forward. of protect mentioned, suppliers, help that’s through benefit using

Operator

JP Tycho Peterson question next Your comes from the Morgan. with of line

Tycho Peterson

Marc, tied maybe can but you instruments. that I some recovery the semi-cycle? a about it of is in a more call much how bit that was little microscopy dynamic, think more color that much you I’m could for you so Just times, morning. do couple wondering how just analytical is did said good if talk pent-up widespread, curious to demand there. electron the of out you know talk you to Hey,

Marc Casper

really few grew so dynamics mentioned think well, very exciting, of here, instruments this markets they’re new materials a Tycho, well thanks in good. investments [indiscernible]. we’ve making analytical the for R&D very extremely analysis, did morning, three our business structural and and and I quarter spec, mass been and performed good them off, questions. the I in paying the are last, XX% - analysis and When all Yes, over the chrom really businesses I performed are quarter, our products, about there the end as chemical

supply adoption that electron read electron that you electron but in semiconductor, of on well in the that what’s everything the across see the and for also applications, material life sure. cryo for sciences You tools both science going microscopy, in see the there, microscopy, bodes including the obviously you around business applications, chip microscopy investments and so from for

Tycho Peterson

got ones. I the move quick made take you I’ve Okay, think thanks. for testing down. COVID, Then On a two actually to follow-up, prudent

durability margins, people Then lot margins. a obviously focus boosters customers, focused the latest on on the your lot thoughts on curious what of now. operating I vaccine of on know are Just and from a hearing therapy you’re side, on XXXX

way of do bit much a year, ask how leverage? little up take drive question by did opex another think through, you will think or to R&D maybe R&D you XX% You Thanks. carry is, do so to more last you’ll the the reset

Stephen Williamson

Tycho, let the me margin question. cover

the great elevated returns we’re the obviously the appropriately appropriately, places, to going really to not those Should going think right fueled appropriately, and base are returns, I in manage do going have go deal to more XXXX. around variable business as the we that and appropriately and position P&L costs forward that then strong with investments look manage forward. the that details we’re pandemic getting spend organic in be when response so to manage company spend, We the better giving appropriately. unwinds, with growth a will we’re

Marc Casper

things pharma Tycho, in in and therapies the in supporting for vaccines large with sciences across ingredients playing in use play culture for business as provider obviously well quite terms like COVID, the and nucleotides, we’re of it so in very bio both as capabilities it’s media, a technology cell role. the as [indiscernible] our our sterile enzymes, as fill/finish active very services the significant, as cuts that for our We right, role the the well single substantial activities and a role technologies vaccines.

capacity be demand to coming billion our to to very it’s capacity we be about mostly year. that at online XXXX, comes would because to expect given support customers. demand as to and the of response to more strong look right our this generate strong able meet and momentum Demand for pandemic, that more and about the demand, so we’ve the we for that well likely orders for is our solutions therapy so us $X.X very right, the expect we industry the backlog vaccine have the into positions been the the going that We very online, robust,

Operator

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

Dan Arias

not you’re that’s out are constrained maybe supporting fully sounds anything mRNA about I’m morning whether scaled given plasmid to already related Good up site the you’re Then do talk Is mRNA to you down new customers you in supply guys, think just the production to that there pretty booked and Marc, on there has capacity say area? work vaccine to the on starting Carlsbad, there, can the and I when I for up question. a so been curious that just projects like out to thanks be think there, with extent road about COVID. just expect it opened vaccines which you them going?

of questions now mRNA we are we some one the where Just thinking concept. have of open here that is headed proof with

Marc Casper

Dan, things on. are great question. A going few that different

so as customers, yes, segment and just for we’re strong. well wonderful increase as across COVID our in the tailwind a vaccine, that’s that is And generation class other in largest mRNA the supporting huge next had given those both vaccines, investment in in altogether. in broadly in that of mRNA has on in so been a vaccines, our success diseases the dialogs and of do pharmaceutical the industry has There of Let’s so biotech biotech numerous combination the very more first. terms capabilities, pharma looks investments that activities

has organic we’ve been shortage seen of DNA, period that things and plasmid One time, that have we a of there investments. by of been addressing is significant the in making that some for capacity

cutting able orders It’s new the meaningful June and - exciting. secure super future July, giving in we there The ribbon to base just in in that’s be that. excited it’s product we’re the and early we’re facility customer choice choice, building and momentum the on Carlsbad. awesome and - facility did been our have I We distant wanted had open we’ll not about and in great. producing that, the opportunity them and visit for and to

Dan Arias

check. Okay, was some parts appreciate the production, Stephen, the $XXX half about little to last time of current bio in done alone, Maybe in not for outlook, of because other just think Novasep. just I half still wanted thinking on than QX just Is that, that that that the more you that. felt given like almost contributions million if so last bit from had was outlook Novasep, I conservative a quarter just that

Stephen Williamson

that’s on secured about orders another the additional in and it’s year, it’s slightly for COVID and the million some that the to response increasing $XX response revenue. higher guide for we $XX Yes, included - million

Operator

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

Derik de Bruin

in China that thought. than recover you to a quarter, Hi, as have the it morning. would about quarter quarter, one, first bit but talk couple I in second market was first market? bit in the Can the wasn’t the as be it the growth, A dynamics lower talk started Chinese China the the strong about just second going to little given guess was you I good - little on obviously the questions. can a it in

Marc Casper

very Thermo and the a is is and positioned capitalize also, normal. to in the we’ve XX% growth I think about team, plan got half. in well five-year China implemented When think to I under has about Yes, terms and outlook through The XX%, much to half with being returned the good start the growth year. activities our I spent the is time for well. of of China performing just first it’s in so off industry, tailwinds that have of our Fisher the quarter [indiscernible] first pretty

Derik de Bruin

is, you that’s of a market? question coming and margin, business. catch-up or getting talk you more concern academic of given tied up, Got in. from the government the is and what the little guess think, is it. in on that there’s there some just bit spending? I’m do funding impact that, can keep Then going I still first one seeing new than it’s blade razor I a PPD XX% a I you’re to think a that another is people business about pick-up of is That squeeze and any people growth, to two over

margin thanks. thoughts PPD, general Just in your opportunity the on

Marc Casper

quarter, had Yes, so that’s a growth, Derik, academic and very good government exciting. XX%

very - microscopy Then when the really the look was much electron the look is know, activity funding, around it markets world our you level bio safety there is and think seeing widespread but really activity funding. was it is that pretty in and because that the big segments two the saw is businesses affected government, to strong. the so you and the about about it and funding across you end you most. As terms has excellent of positive world of . we was place sort talk - in about that you’re performance forward, research sciences, good also there’s be obviously four channel things different, XXXX of around now the pandemic, talks last the market What normal, about encouraged I does academic it might mean, serve really the year very those one of second and quarter, the is back largely of that’s what activity returned actually high, in about One because so going normal talks capital I’m

Stephen Williamson

income the lower the very rest scale it growth than company it margins, Then from company, so dollars, it’s to just need different that industry is a open margin thinking to asset P&L will a in about and company It’s business business. significantly that wide you’re that as coming some the knowing lower into margin than is company than be factor on will about eyes opportunity going higher PPD, we thesis the average the you change average, of average it of modeling into the profile this, that the expansion expansion--we’ll margin company. into the at equivalent in is than we’re outlook lower the company When has, of be cost company slightly the Derik, profile synergies, great about we’re the this doesn’t but for the whole investment change but be growth going get think average profile bringing bringing PPD the that in you margin operating and and the margin excited the expansion or but year-over-year forward. doesn’t think the and that that rest

Operator

question from the Citi. with of line next Your comes Donnelly Patrick

Patrick Donnelly

core talk of big about the you lower business COVID Marc, it path on - Great, just there, the we taking recovery guys. but the diagnostics business bit the thanks than you trends half? for is the testing one Obviously questions, a specialty back maybe in know, came can piece, what in expected. a looks that chunk like the

Marc Casper

encouraging. the for I on Activity look diagnostics quite pre-pandemic at the specialty to business, much levels are the pretty is back thanks When in Patrick, Yes question. what’s the going business actually underlying levels. actually

our You see it immunodiagnostics allergy growth strong and in in really business, autoimmunity.

on so saw channel, in it’s healthcare hold, You a it businesses growth business. in were as also you good but our highly you ago market diagnostic see were encouraging. our saw in [Indiscernible] microbiology, when disrupted procedures put year well it transplant

revenue specialty know, I more comparison a and the the challenging second that as good the--you do well, see there of of underlying about but in the some terms feel In you response COVID diagnostics. within will outlook have half,

Rafael Tejada

more question. time one have we Operator, for

Marc Casper

I think Patrick just--[indiscernible].

Patrick Donnelly

just Marc, the FTC. you one I mentioned sorry, PPD. second Yes, on response from know, quick a

update Thank the there confidence of what done. has any in there quick in a Just surprises terms discussion from the and getting level been that you.

Marc Casper

there. surprises no No,

through year. working look the close and bringing to take at we’ll and it to one forward the question. the we’ll more Operator, process end collaboratively just a work of We’re

Operator

with Leerink. Your will Puneet from of line Souda last come question the

Puneet Souda

Yes, question. taking Marc, for the Stephen. Thanks hi

for Just Stephen. quick a Marc--actually, clarification for

where the contribution This maybe Does to just removed a of related, mentioned? COVID of have times I but just you in that was million there, in points growth high on level, Could acquisition, you, speaking, grow. on been stands number that opportunity and mentioned that still been closer the a highlighted you today just number decade-plus a a you maybe us do for the covered, to pharma company. of the view years, terms go and that to continues where expect Orbitrap very just few Thanks you Then growth appreciate that if part know its remain, next so given some bio had and or de-risking so the a to, where the over thoughts of of [indiscernible] On I’d levered high or areas broadly Mesa so. much. Marc, has a $XXX there. give platform

Patrick Donnelly

Puneet. Thanks

very our customers, the relevant the positioned and well. phenomenal is excited we’re the were for look small well so a same for it growth of so that you’re about on you for but about launch of opportunity forward there the at instruments more wrapping drive the they the focused for what up biologics solutions. method It’s the building to in so scaling bring great out turn and there, relevant really remain assumptions QAQC, chrom Orbitrap, we’re just menu. technology about the really performance planning thank very complex a large of market we’re working push terms analytical Puneet, where spec as more and to even we’re more which mass out recent for feel we’re I good perspective, the very The manufacturing up exquisite continues our future holds revenue here. molecule used to I’ll a it, quarter, continually analysis, terms and as well questions, business When Mesa, In positive. able from on the the is also term to last capacity, our what excited technology. being I the in multi-attribute technology, and business, very for as It longer super technology and most

Marc Casper

excellent We the first year. of really had an half

virtual and looking analyst up great our bright with in XX, and that to future call. QX on sets more we’re updating and on course a to XXXX on day October sharing We’re you to track our our September for deliver momentum about future, forward we’re us year outstanding during of another enter then very going

ongoing you always, support As thank for everyone. Thermo Scientific. your of Fisher Thanks

Thermo Fisher Scientific (TMO) 28 Jul 212021 Q2 Earnings call transcript