TMO - Earnings call transcript Q1 2022 | Thermo Fisher Scientific Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Thermo Fisher Scientific 2022 First Quarter Conference Call. My name is Nadia, and I'll be coordinating your call today. [Operator instructions] I would like to introduce our moderator for the call, Mr. Rafael Tejada, Vice President, Investor Relations. Mr. the begin may you call. Tejada,

Rafael Tejada

thank Good joining for morning. And us. you

is Vice is call Officer; our Senior webcast Financial live with on is the be Investor the and this available the Marc quarter XX, XXXX. Please and May and note, Officer. Section me website Williamson, of until and first section Executive investor thermofisher.com our On the heading our copy being in Chief today under Casper, call press of of Chief events XXXX and under of the Chairman, Stephen earnings heading news website release archived will A our financials. President the President,

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

heading be our today. as so if call, point our future, we on representing any during the even in specifically of rely our forward-looking non-GAAP GAAP. change. may we to of of will some in and should statements obligation forward-looking to as subsequent the elect the accordance to the earnings any prepared accepted full-year quarter with not section at While to comparable we also the accounting this XXXX these Therefore, press GAAP these views not do principles measures referring available statements A update or disclaim Also, measures you financials. estimates generally of website investor release first is under directly most financial our and to measures in reconciliation financial in certain

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

Marc Casper

Good Raf. our today you, first thanks joining us Thank for everyone. quarter for morning, call. And

saw you start our performance. delivered had of We the quarter another strong a to financial year. very excellent in press we As release,

core very That including PPD, and the clinical success is pharma opportunities Our going broad and the biotech strength we're customers. business further business, to performing about we even integration excited is well. our where more based, smoothly our research have is the of enable

the great gain reflect I with we share As on execution business. team's quarter, saw very I'm across and the our the pleased

as of success macro enables Our events in about start lockdowns for growth proven and the better every continued strengthen think continues hasn't When has the our year. the I changed What ability team be differentiator China. our to to The It rising navigate landscape much PPI day. result a of the war finding to system, Ukraine, dynamic which strategy our way performance. exceptional deliver further is since COVID inflation, changed a our company by our and a business us.

quarter first the results our in and that for see You'll outlook year.

So me recap the financials. let

year-over-year quarter the $XX.XX XX% in revenue Our grew billion.

Our $X.XX adjusted was operating income billion.

adjusted another delivered adjusted $X.XX first we strong XX.X%. EPS margin the of share. performance, per was Our operating quarter quarter And achieving in

performance momentum year. to end you the Let me we on performance XXXX Building the now from to give color start the by excellent our markets. on delivered

strong quarter gain. our due this good team’s share execution, conditions, to were outstanding and results Our market

in and good status. value we pharma digit grew our needs. broad from base electron Starting we testing the with government, We the in we and safety support outstanding also the quarter, performance research of customers as end We our with growth to microscopy, had our this and meaningful in contribution as channel. quarter trusted had customers’ during the another mid-single strength in and our In COVID-XX partner biotech, market, academic delivering market biosciences, continue mid-teens. growth

applied, market the instrument core revenue research spectrometry well businesses. we chemical the channel. all And microscopy, diagnostics, the in finally in transplant and and growth diagnostics, as in Electron healthcare, chromatography, and healthcare strong the industrial saw strong safety channel. analytical mid-teens. to as we and the mid-teens and In Turning grew in in analysis, diagnostics during clinical quarter. declined mass our saw of We the market QX business in growth

needs. to well really executed team the quarter testing support the During COVID-XX

instruments business, monitoring, Gas our optimize Gibco for for environmental, provide launched progress industrial, the genetic proven a Chromatograph, innovation, emerging system in Let elements, instrument customers. first for cells, cell delivery the highlights. We number advance includes commitment high This executing offers impact and a Xenon four CTS of new great few Series in in as In material and value our clinical into quarter, Gas analytical products fantastic improve update scale part A made and a was we Biosystems the and for scientific of we QX, genetic Instruments, which Starting important me customers workflow. research first just high of incorporates manufacturing. their Scientific pharmaceutical health to with it highlights. customers launched in food, efficient progress the sciences the enhanced Electroporation for Applied our automation to and of flexibility our advanced ground we I'll bioproduction, a genetic of proposition as unique to few new XXXX new Thermo the to to our pillar, therapy quarter consists TRACE work. we strategy, innovation, In the launched share an the discovery. three growth now and growth applications. analyzer In will we Series testing Chromatography in of and the made high-impact which SeqStudio Analytical a Flex launched break help markets GCMS our that

advanced improve is just leader for new Genexus and an on as precision we enabling company, to strengthening two our signed company our position sampling Oncocyte, science. of Torrent and addition, This success assays small Ion going innovation In develop System precision diagnostic medicine. in world our profiling, a our the serving the customer outstanding tumor agreement with across to cancer

pillar strategy in high grew second for our growth of We strong growth in the The in experience these double-digits scale our markets and customers. differentiated performance emerging including create which had is our a to China, markets, quarter. leveraging

around and Analytical Our used growth being business Instruments the are high scientific research, markets. advance world including the emerging to

Biological a For virus biology. their University National researchers And accelerate example, are using research. to microscopes of Sciences mass at our our in imaging Korea, Pusan center accelerate spectrometers National enabling structural the research electron in is to Beijing, Institute bio to establish in

to our customer strategy, turning of the pillar our third Now unique growth value proposition.

To storage going enhance We facility continue and help we sample capabilities, we be California. specialized and therapy our expansion opened provide bioproduction our well. new bio our a to partner customers This will gene biological can stronger repository cell In Vacaville, advance logistics. so and therapies industry even in leader. is cell an network

a provide we additional containers establish cell use entered collaboration pharma for trusted vaccine dedicated and quarter, bio services, we inspection large agreement mRNA-based labeling scale culture we'll Under of with final biotech manufacturing agreement, along single fill-finish on this the media. online therapies. with and aseptic range U.S. process and with capacity of and customers, packaging. capacity Moderna for a to strategic During brought our XX-year partner Reflecting status

impressive. Greenville, Carolina the support quarter, where expand significantly invested visit I past had years to the and the truly to our couple During North campus, building pipeline, we've it's capacity our the Moderna’s will And chance new of over capabilities. that

our deployment. like capital to further build strengthen of turning Now, our we've I'd steps share and to the value future. customer other proposition taken to some

successfully returning to We continue of execute shareholders. capital our is deployment combination strategy, to a M&A strategic our discipline and capital which

the very full The new the strong well clinical in for running a first from ahead the business, year remarks. quarter us allowing this our research contribution the his like the is for and our on is these business. our to and was business cover will deal of progress. update of details Given to outlook increase I'd Stephen you expectations PPD, performing start model,

very integration, going the it's In terms smoothly. of

further of the the of capabilities, realized first invested synergies. and well our Virginia. our growth bodes biopharma our and seeing expand also pharma are revenue we in this combination, demand and to customers from synergies customers, commercial increasing we've fuel support the To authorizations combination long-term clinical Our Richmond, from biotech our for value value who securing research new our have customers operations

as with to part team, Finally, of partner super the level Fisher as I've to for the together taking we're I've customers. business And Thermo even been next our the stronger sites. an become impressed different visited

is integration on a incredibly business mentioned reagents late to note on I great bioscience provider a we of that PeproTech, closed call, pleased year. also is well. I'm and last start leading the that last As our going

quarter, to and completed for customers. deal our and purchasing capitals also During in $X analysis structural shareholders. bolt-on our during shares for QX, analytical materials increasing we our XX%. a instruments the dividend returned We our we offering significant of small billion our enhance by And

of marked ship broad brief the We foam million Turning milestone coolers chain first solutions. environmental polystyrene enabling stewardship This now initiatives. during one to commitment use coolers. exceeding our paper readily a without to significant on on traditional ESG sustainable the a of adoption update coal products quarter, to recyclable builds our transport and

programs events establish curriculum my an covering fields. impacting advancing and development, San Diego like recently by This talent world especially large. the to the and research sustainability outreach at career for I'd California of partnership partnership resource innovations our with range that reflection in engaging a of collaborative accelerate will a In development. comments recruitment addition, also and focused stem opportunities, students, centers network and supporting in It a under end scholarships, and will technology are guidance. colleagues on tech with on we the our in XX-year educational announced of advance University community fellowships, to joint and innovation, Before accelerating scientific mentoring,

colleagues for the our to and countries. enabling life globally, our that relief colleagues. supplies. top who China, lengthy safe-haven to of where made our this in We're are priority to a safety the also food challenging of provide variety have due limited As recognize facing always going with supporting colleagues, providing together to payment and many daily special residents Ukraine we're disruption health We're faced our needs substantial and summer from Shanghai to is is in and lockdowns team, displaced in In our with responding of a donations our colleagues inflation We're we've Ukraine care packages organizations, pandemic. colleagues. our and

We're to Stephen dynamics. like million which $X.XX We're revenue full XXXX impact per guidance year revenue outlook $XX.XX meaningfully would our guidance then factors by take reported the will through over raising $XXX I'd adjusted it our incorporates share. very billion, QX, a high guidance. growth core Now, to you year. level, X% and XXXX. result $XX.XX strong our to guidance we're at review increasing the a of And guidance our the details. of by excellent remainder recent expected the macroeconomic the raising XXXX EPS includes in are This And business for in

guide year QX well these the increased reflects, dynamic is Our for team navigating and how times. results our the

key to from quarter. the our So summarize takeaways first

by proven Our were outstanding driven system. and results growth our in strategy QX PPI business

very our and performing all share. stakeholders. ourselves The is to gaining of continue really well we're well business and is PPD strong market to generating we’re acquisition differentiate positioned returns, Our for

CFO, for All our I'll Stephen of now solidify our bright our outlook Stephen? raise to hand us enabled incredibly that further and With Williamson. the this over call future. has to XXXX

Stephen Williamson

good and morning, Thanks Marc, everyone.

of than you the just flow. testing million in share, and $X core testing. over quarter, start just of and our under adjusted million Revenue $X.XX of the QX QX. higher the the with earnings a markets billion guidance, we'd year saw was across we was organic previous very per from $XXX started XXXX and brought-based press As driven in by The in we an growth, $X.XX strength for XX% geographies. our incorporated free strong businesses $XXX In billion core COVID-XX the core business delivered revenue, for billion excellent with year cash $X.X of release, and

generate to than higher in $X.XX this very adjusted QX Our pull was revenue through PPI on EPS for business previous guidance. strong us system enabled and our included

So the start broad-based year. beat to

versus our quarter with the Let and me down X% delivered provide QX, up the more with in X% as EPS now the year. year. you performance. Beginning prior I of EPS $X.XX mentioned in GAAP details results, some $X.XX prior was versus on adjusted earnings we our

the reported quarter Core XX% foreign revenue. we revenue QX exchange. X% revenue of in X% On growth line, the components testing QX a I The headwind top revenue XX% included of COVID-XX was $X.XX as organic revenue organic reported contribution acquisitions year-over-year. increase from mentioned, and growth grew billion XX% from a our delivered of and and

skewed performance in by In the revenue organic America region COVID-XX QX, low-single our and rates digits. by the current organic The flat. North was growth Europe to testing year. are in the geography. revenue by prior Turning grew

was grew expected year. slightly Pacific China declined world operating in appropriately realization, respect Asia higher the adjusted to of and operating times. system and financials, higher volume than Adjusted QX XX.X%, business the investments have decreased performance, how prior XXX digits. of with in the our in well investments PPD low-double productivity came business points growing executed impacts testing QX including colleagues. margin With address us core for incorporating operating our rest lower and in to in in manage to our strategy the mid-teens, last volumes and operational enables our X% us than the this of in lower the and the offset reflecting And growth inflation, digits. strong more PPI margins adjusted impact leveraging by our dynamic continued quarter pricing was low-single we'd into anticipated guidance than We enabling basis income strategic

to XX.X%, adjusted QX company the gross year. than margin quarter the came basis lower in the total points P&L, details in at last Moving on of XXX

growth due margin. first revenue, XX XXXX. those margin Adjusted adjusted to was of of gross to For the innovation over in million was QX fuel Total year, basis our decrease quarter, quarter prior growth. XX.X% in operating impact reflecting XX% $XXX ongoing the points same as in a in investments expense QX representing approximately was versus the drivers SG&A of high change future of the R&D the our

acquisition of than results quarter, million $XXX net the to last below was financing largely higher lines due year QX activities. Looking interest million, at our the expense $X

shares basis a planning dilution. in QX million $X initiative. rate quarter XXX by million purchases, was QX, approximately driven was adjusted driven option net in with of lower the points Average Our year, tax XX.X%. than last This diluted tax a by year-over-year lower $XXX share

Turning to strong flow the cash Cash quarter. flow on sheet. another for the was balance highlight

flow was to business was Cash the and top line PPI system very performance. significant from from strong QX flow flow the activities billion, $X.X quarter Our deliver free enables $X.X for operating cash cash in billion.

$X and the expenditures with well million. quarter we our to approximately Our and this $X.X buybacks. net quarter's during investments billion capital capacity billion billion through In capability progressing total of we and January are shareholders $XXX XX%. capital debt. dividend increased returned in We of the $XX.X with cash Also by ended QX

my at Our and performance, company. company debt EBITDA, XX% gross investments leverage ratio And X.X and concluding reflecting strong the that the the was on we're debt-to-adjusted X.X on net ROIC times quarter end comments total adjusted basis. the times across returns with our generating of

Now provide some four performance business color about segments. on the

segment testing framing of couple segment prior a revenue and in year The was and quarter, testing of revenue previously the margins. the with PPD and laboratory profile COVID-XX referring business acquired reported start biopharma by And me we're our resides to clinical varies business, comments. that higher of as that skew mentioned research our the in so services and the does scale Let margin as significantly some segment. products

year-over-year. and electron XXX we in income operating Segment XX.X% businesses. adjusted increased points year QX margin versus growth genetic increased sciences in lower led XX% the the X% than microscopy more offset and by margin moving X% productivity a up and organic adjusted reported and mass upset segment segment strong basis was QX chromatography with This decreased Instruments bioproduction was businesses. lower growth this to ago Solutions organic investments. and details, quarter. The business strong in Life was basis adjusted In that QX and strong and segment revenue was spectrometry down quarter, Sciences by operating mix In revenue very XX.X% strategic biosciences quarter. our X% was prior lower business the Life points So in segment by testing driven delivered was quarter operating delivered year-over-year. In reported this Analytical and in starting operating increased XX we and income adjusted XX%. QX onto Solutions. QX X% was in the than the by revenue year Science the growth revenue revenue the

During the quarter, we delivered strong through across productivity, investments volume strategic and by we're offset pull making that segment. was this

basis organic COVID-XX versus Diagnostics. a businesses, which underlying revenue quarter, declined quarter. In was Laboratory was from and the Specialty down segment. revenue to Turning investments saw XX.X% was increased testing X% and productivity. And clinical we the reported and drove lower mix by QX, revenue ago Biopharma margin revenue QX XX% QX the business and the operating income adjusted This prior operating Products reported in strategic in transplant In declined and the was decreased quarter QX segment adjusted strong than Services market offset XX% in we growth our the offset strong more diagnostics in by points segment, in In finally growth channel, healthcare the diagnostics year XXX X%. year. organic and the in X%.

strategic XX.X%, year. basis and adjusted than we and investments the quarter, adjusted operating XX% drove productivity, income mix. a research and had And prior to in we safety during margin lower the segment average operating by is in market organic research few more strong revenue the well. growth strong segment quarter, business which rate. of channel was the It the laboratory billion the $X.XX XXX which businesses. than QX In QX, performing points PPD, the the very in During the company clinical our increased quarter. growth products, points offset core business it is is contributed and above grew

we’re core year. as outlined, line, $X.XX now by XXXX We're from to updated $XX.XX bottom And our the for raising me the year. raising guidance full EPS we're revenue our guidance, million to X% by X% to $XXX turn guidance organic growth adjusted for $XX.XX billion. outlook year our revenue increasing to Marc our also the on Let

outlook, strong our notable call very following factors particularly as So that in it the occurred also last earnings February. in developments macro

through excellent to deliver macroeconomic Business our help the strategy System continues reflecting environment of with results, to the of scale. speed strength power outstanding an a proven growth the navigating team job us to and operate do Our PPI fluid at

let of three elements in of assumed increase the it raising core in the a revenue. chose core higher the the a And due are Ukraine in outlook, driving me $XXX de-risk revenue from terms in in revenue revenue details $XXX testing million FX into for the offsetting business. lockdowns conflict guidance decrease the the $XXX rates headwinds in and million we the change there COVID-XX vaccines So, with raise, year, to get the raise The other guidance, million million million a China. therapies for $XXX incorporates outlook the revenue $XXX and to and of core

$X.X still growth therapies the and guidance the COVID-XX performing XXXX. as X% is year. to organic assumes able being in very of previously, of I the X% these And the billion Incorporating both well. core the and from that now shows for revenue mentioned core outlook Our outlook full increasing for year total vaccines we're to raise for business

a for outcomes as year. same assumption, like de-risk testing there guidance the approach of range to revenue the COVID-XX terms of continuing In

revenue scenarios We're the half XXXX, in level these And support we to higher year. should Our approach customer be a to guidance be QX. as $X.XX billion that was thought did P&L, million prudent are through to an flow a level. testing take outlook. we'll in QX, then the per the of quarter could endemic represents the delivered our assumed million which of positioned case? QX $XXX benefits where for demand we but to de-risk in it and continue than billion second rate well revenue needs of $XXX in in now now this run of There testing And the assumes $X.X

to strong profitability, million expected million revenue, impacts to partially pull with compensation the adjusted a to raise through in on income of colleagues guidance. million $XXX additional additional operating deliver revenue up In help by This the of them offset reflects insulation. terms to temporary of $XXX we more our $XX

the XXXX. We adjusted continue be to in margin to XX.X% operating expect

adjusted $XX.XX In EPS, enabling of is terms outlook very building adjusted strong $XX.XX by year. outlook for business us on to guidance $X.XX EPS the an stronger raise our to from further XXXX already the

business the Let basis your XXXX business, core $X research prior $X.X FX revenue, guidance. me of XXXX to just up be couple the you a billion billion to a you a $XXX million EPS three and percentage EPS. which deliver is We provide in for organic a headwind in from expected adjusted operating $X.XX points models. of XXXX in income XX% on the clinical guidance. with business now of adjusted help a expect in to represents previous on details is year up our on $X.XX our to $X.XX year other and adjusted this guidance contribute deliver now our to year-over-year revenue, PPD over or growth X.X% expected now on full with from

XX.X% than driven expect the by now the million We continue $XXX higher tax slightly for prior outlook. year. rate We of the net adjusted guide XXXX, improved expect an expense in to of approximately income earnings interest

growth capital to $X couple guidance of share of full and expected $XXX they're billion We shareholders $X.X the your and we diluted estimate And billion. net of capital that help of the finally, the we with free dollars revenue cash count approximately to for on average year million deployment, billion buybacks January to completed of to point comments of A assumes to in $X.X to higher expect fairly year terms QX adjusted XXX estimated Core phasing, QX for and EPS expected as to lower organic to than And than is basis be and QX QX QX. QX lockdowns an in of impact assume linear and capital due slightly phasing which still QX be of you China. be the in being million full is expenditures through billion XXXX start with between call we will and we'd be modeling, return the turn lower And dividends. to shares. With last To goals. I'll flow year. year an of just back the over XXX $X that great position a the XXX in to comparable live our now a continue to of percentage share slightly approximately to the that, billion than periods year, remainder million $X.X a conclude achieve Raf. excellent we're

Rafael Tejada

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

Operator

Thank And today comes first from question you. Jack, Research. please Jack ahead. Nephron Meehan [Operator our Instructions] go of

is line open. Your

Jack Meehan

Good you. on guys Biopharma Thank the morning. doing side. you Hope are – question My well. are

XX%, First so over question far. and levels have what that's above growing been clinical reporting on historical well peers research PPD so

Can the and share? to you gain on driving your is comment industry what Just funding acceleration? ability

Marc Casper

Jack, for the Yes, thanks question.

clinical off formally our to business, start. So PPD research a great

about focused after authorizations. great As good even growth and just execution. potential great really from tremendous that especially strong delivering continued and and QX. the in are a performance, into excited incredibly reminder, Very performance the revenue on announcement, XXXX great success business authorizations, the on Customers had momentum

going As other companies look some the to our we that I favorable of have saw. look the reported, industry results on look results that in the at and at what's

great strength within point. excited really feel call start to wins types, customer has form environment, the And So We external first was as I reference the based good different I'm across actually it an commercial we that about year. that, the switch of the in a PPD feel our the secured and was really team gone authorization. broad about that, good would that are related well. synergy new Integration's what funding

the year, our cool business. potential we're to a excited and clinical really research start for So about the holds what very

Jack Meehan

Great. the a growth second and the to square And as your $X.X ability wanted for to overall. the core new COVID I therapies question, raise with billion vaccines target

comment this? factor if can are how place. still just, changing I new the high the look bioprocessing COVID that doses handoff off of, the per they is Moderna growing Patheon and relationship on And strategic So, and single plus digit you might at kind businesses vial into taking

Marc Casper

therapy we're the Jack the and enabling technology. the in as and decision guidance great number the involved enterprise our we're vaccine investors because the that relative so in year. involved million value start the can we The of involved do. number so was programs, Yes, present a therapies vaccines We net we're many we I to the you therapy know, expected It's of value question. of we guidance had still did We on just of of from we call questions said, the actually on the the company in and that $X.X and is disproportionate, We're actually related just put the $XXX and was programs a a programs revenue, achieved. basically involved So, which made billion in a range. at vaccine revenue high the the of original in getting good what product. of under right? on And drug to vaccines were substance for just be thanks. the it end sort we therapies, drug really

just wanted capabilities different other the, technologies and feel enabling we it. know in performing as to target products dialogue off repurposable number truly provides biologic the products the makes because So core about the and to capacity chose that our is you table, really and well take so customers field. other the within these to effectively We the to of it's of the the reduce the in business that many is good we across sort

and encouraged our in very to expecting XXXX bioproduction beyond. we by that. are strong then we're business very And your growth services and So, question, for pharma our

for thanks Jack the questions. So

Operator

please Patrick, Donnelly Thank Citi. Patrick comes our you. And of next from question ahead. go

Your line is open.

Patrick Donnelly

quickly seeing for you're taking headwind Hey Can I more China Marc, on my which a again guys, what than than you talk others? the Obviously And being this affected the in piece, happen. just certain know then others. going about for XXX Stephen week, entering there, there thanks businesses escalations Beijing touched we're are XQ. poised maybe what conversation businesses on assumed bit questions. what's of terms guess, more to are guys or to seeing recover I have you

Just curious there. perspective your

Marc Casper

for the Patrick, thanks question.

navigating in the and after really Very critical end QX to back we of really fairly to normal customer job double-digit towards QX started team And provide that What there, the growth the straightforward. base as did to difficult XXXX to an you the So, looking the are business the QX products assumption disruption. in the QX as supply of work able deliver is China, of our We're know, and excellent circumstances. government the there the in that be year to growth. to actually even the quarter at lockdowns back quickly strong super the impressive. rebounded half with

So quite is is the there resilient. economy

assumption in a the a to that couple it'll We're institutions take, into number for rebound would of Academic up. in and be are the that, quarter, customers is as time this so ramps numbers closed the activity there's Shanghai Our headwind. closed. back of points period because baking of

how of is good, then and and revenue thinking for QX the able clearer we guidance QX, views, Stephen bake there. that which up it about the that's from we're feels to quite into in of So but is to what still in fully were a that our terms pressure little it bit try QX, that phasing, picks quarter. And make our outlook

Patrick Donnelly

business big get point, this rest Thanks perspective, looks is Marc. piece year? way know to that think transparency and in maybe think investor another to that the focus of XXXX, mostly decline. helpful. your wondering Obviously changed we about like It's into the as terms the your what a at Sure. have it. vaccine core rolled there into bioprocessing That's billion it kind Has gradual just of a of be high-level $X.X And Thank it's next appreciate to of Just how bioprocessing even then you we piece, year? thinking into offset a that on to all? going I guys will as move forward. the on thought, that you. one

Marc Casper

Yes.

on So, thanks for Patrick, follow-up the that.

is last year things transition how it's time. that we what scenarios, it, the the model the in exactly end all about following, Stephen demand reflects capacity it September, that's so by there model that COVID quarter, transitioned will are think re-purposable which period. the Because the many hard would I out, for of So, And very move our right? say long-term to the the of effectively presented timing and that play which long-term over

the core. it X% outlook. was affect long-term of doesn't So X% It that to part

As mean, both as I to XXXX, a and play looked reminder, therapies we a I vaccines. role in

range actually I So, out therefore, most they is, scenarios should And smaller, Obviously demand cycles level exist vial, single the different a drives existing wide the year. outcomes. some therapy which per endemic are more think, consistency on scenarios, thing. in with the of vaccines and and form next of some have use pandemic is different revenue

of So, will. manage is you we moving all transition of the pieces. and at job have manage to a that, And right lot our the timeframe

therapies new activity the that, commitments piece of in information interesting think COVID, to activities. actually the our within own repurposed is and of one of I I its think, is not customers, level the tier other one just top

of basically portion for other future a basically thing. for to smoother taking the use even transition is capacity, going they need the basically, that COVID say, made in it actually and it. And was don't when they're commitments that So

So, hopefully as and deliver strong company. a a to manage color will all that time that growth that gives continue sense we'll you over

Patrick Donnelly

Very Thanks helpful. Marc.

Marc Casper

Thanks.

Operator

Bruin go you. your comes of from open. our next America. Derik, Thank question of Bank Derik And is ahead De please line

Derik De Bruin

everyone. morning, good Hi,

Marc Casper

morning. Good

Derik De Bruin

I've picture and big I've one model got got then question. question one

margin. help can walk gross through on going Can things and to FX you So, and sort headwinds of us through model, you We seems us through? XXXX? inflation progression are the understand gross margin myths us miss the see the the through walk continually in model

Stephen Williamson

the so But of of when sizeable of That business. down the and the that having overall the about in factor Derik be year the margin that so is still people year little it's the in impact gross kind gross fully let's then lower of you in slightly the a of And to Yes, PPD. are the really remainder quarter PPD for profile. level and terms in. of benefit in kind company's in not mid-XXs. this impact of is negative the think of another has margins then FX baking I XX.X% change margin the coming think And testing bit what

thing missing the that's probably most. that's the think I

Derik De Bruin

XX-year there in I and the should that how PPD? other see about Can targets sitting about on think with that Moderna can That's agreement wins do synergy space. that the surprising biotech is the of helpful. talk you see about driving it. ask longer-term that It's in what we with And space? in And because something to sort it's mentioned of you people terms Got agreement really in of you also PPD, really is wanted you not done. like, our sort just some

Marc Casper

so, thanks question. the Yes, Derik, for

about high-level and So, unless we're know, is support customers this is really own than to it's some activity. customers’ happy behalf, as never you our because right, comments, announcing their talk job specific customer on our a really, make more to we then

I they the the trusted opportunity Carolina, with that to will And pandemic And the to we different in supporting our clients capabilities case terms of enhanced as course to North work in all And did that partner take things status during of perspective. there. good the of fill future support support the a think in with leverage Moderna from our activities. that of and pipeline our job reputation, had that the is their expertise Greenville, exciting decided it's really our and across of customers. our finish of longer we sterile a capabilities them our from term super us the our

condo support dedicated have what business. where customers the we to of with call We way how different our some them in many capacity. our that And in clients work models, services do models have pharma We it's they our we job have best want.

We And have traditional have innovative the some we fee-for-service then models. ones. other

right, announced which are was to couple us. one obviously going a collaboration facilities, one public the is, of with years therapies other we're took they expanding new which and one was ago, The over their their we CSL, be of manufacturing

is So, long valuable and job it's future customers options our really to and of them. be to menu help their a navigate our

Rafael Tejada

Derik. Thanks

Operator

Savant ahead, question your Tejas our comes from is next line Thank you. open. And of go Morgan Stanley. Tejas please

Tejas Savant

perhaps the you Hi just in us to about level how than point to assumption for philosophically, little the here. in elevated thanks here? that past inflation Xx you the for some a at the on starting in Mark, Good you spoken your bit about normalized others? question you refresh in be time And about impact segments And Can guys. XXXX. need careful increases more of pricing, the which context customer a you've the pricing sharper taking morning. do think demand perhaps for

Marc Casper

great right. question, Yes, a it's

team about inflationary navigating doing think mitigating mitigated. and and good job be we an when of and So, our is can environment, through productivity a cost living managing managing what

pleased I'm So, with very that.

it's to Our price you we know, or expectation half expect within for of our double for about price price a get that business. the year we this outlook that of a pricing normally point point our range would is – the year. that would be And in two of within as high points about and end

have we job positive. our inflations support support explain to customers and it's been customers, those to constructive the So, can dialogues and we to need us. our it and where where offset And

Tejas Savant

focus are sort you customers one specific delays up just if here. your commentary can customer then curious of has little bit quick in cancellations, and Got Any taking of Obviously, sort strong And it. performance biotech on base? any of share you particularly their you on the follow-up pass the But That's PPD. segment numbers a of you among out a helpful. midcap RFP quarter, there can deal. been had for that on on flow, color

Marc Casper

Yes.

had is, cut the of I and the a the that at no there in of the deliver I commentary, And strong views look track there I was was are on read I there differing abnormal that at, is revenue, all, strong my start when which the at cancellations that. the any by actually XX% types the impressive last nothing this to at is in very I of for growth not results, of to quarter, but take it trend really different look to we performance, the delivered. different the year wins. growth terms look authorizations, new the the at we When business the spectacular, I customers, look look year So, out year. looking When when pipeline, at right? but I we're some In because the that is we're really

really we So that's better challenging for that this expectations And high can against year, a when synergies, single that. digit it long-term but a the also really, encouraging, drive, support is that support authorization and this business. comp be growth than

early. obviously but times, cool super So,

Tejas Savant

you. Thank

Marc Casper

welcome. You're

Operator

from our comes Thank go the Kumar Vijay, Vijay question ahead. next [Evercore]. you. And please

open. is line Your

Vijay Kumar

my and here, for strong a Thanks QX start. Stephen. Maybe congratulations guidance guys. for question Hi in on one taking perhaps really

and high PPD much was new vaccine given, XX%, PPD just XX% and up base singles and consistent the singles the outlook your given down for much high now think I guidance call year. prior that core, I going [ph] is a is going vaccine base across versus assumptions? is think guidance up How how last under

Stephen Williamson

Yes.

the is the up PPD year. the to prepared Vijay, outline of the for business in going remarks, So, strength XX% so

therapies, and increasing So the that and be characterize contribution it we're a all our from therapy vaccines guidance. vaccines you and that would and of can strong then that offsetting

is in raise. core $XXX increasing million the the business So

offsetting And macroeconomic and implications therapies the that going back into core, X% performance. taking of strong in So up in to and Ukraine. to switching the X% an China that's situation impact and to obviously in account the

Vijay Kumar

end That's helpful And worried looking QX but really looks the for about fire. when maybe into comp should or is we helpful. XX% I approach you be can segments biotech, and expect Day, think one Thermo, markets, what will Stephen mean, it close will just get just thoughts and vaccines stock the and given I here. macro, are you all what a Analyst about end pharma and that will to rest core approach markets Maybe strong, expect being from on comp. the of XX%. be analyst? of kind perhaps talk the outlook these I Marc we versus know the and strong like the rest upcoming at really, about health be understand the are It street we're of XX% any

Marc Casper

our stuff to great to I a detail. team Yes. going the some back of it more way at It'll be explain going cool. I wait the in showcase until today and in some May great showcase company. on super can't things It'll we'll the mean, And person. XX. be have We're

highlighted huge. cool. momentum the I is are awesome. right, on right? internet, time an And time it about of mean, external gaining think our some bumpy in that Because when markets papers, read of the I and the the whatever customers very now, a right so get company get is dynamics, the super business, share, watch perspective. it is four you you is you're the within the well, be that The but it'll macroeconomic it's you positive doing When it you is from we we it the if world, TV, world, walls are amazing

delivering I I we stronger so, I we even recollection, about than from growth when And growth, last year, core base think were challenging that environment XX% comparison, and a XX% had of think think revenue. against, right? and had our growth XX% very bookings organic that

geographies, markets all sense a quite how the things good. good actually end of you the it So and were gives are all of Right.

I So, think able is scenarios level. feel I even there good to de-risk of that sort we to therapies, good and about vaccines going the above that outlook. de-risk are feel the momentum were I be about the though,

worry so when the colleagues macro, think, Like business in of XXX worry And I about stuff my China. I worry that about the where associated and, read I I think Ukraine. is. when That's kind it. that's colleagues about colleagues. about positive in super about It's world the with about is I the our our less I macro, concern our really self

Vijay Kumar

It's Marc. you. perspective, helpful Thank

Marc Casper

Thanks Vijay.

Operator

[indiscernible] ahead. then Thank question Rachel, you. of from Rachel go next comes JPMorgan. And please

Your open. line is

Unidentified Analyst

the and quarter. on Thanks congrats Great.

China, from Ukraine and on guidance question headwind the China. million incorporates So flag the $XXX you

think talk return in and you XXXX? you specifically out China? how So in about much growth in that terms should guidance about is just future then can approach break of just your of China to how And we could lockdowns

Stephen Williamson

said roughly, is Yes, of And from economy. original pretty it's pandemic pretty so of depth to roughly on as and Marc Rachel, bounced back earlier the China. that half the it China fast, resilient that related

they're been positions of So, work. focused our back a to success running workplace. that very from able get enabling learned of on they've to and where And pack the customers help out we've the get to we're up that of when out

Marc Casper

Our of it's for in guidance all QX terms China. construction in assumes

Unidentified Analyst

And spend a well? capacity in constraints you're could the and talking what Thanks. you environment clinical in hospital of terms seeing as is Great. minute Thanks. funding how then trending about

Marc Casper

Yes.

of When healthcare we terms digits. core diagnostics think in terms single good. was of about high in growth the the I So and broad-based in there had strength actually quite core there

some customer obviously why the healthcare for is positive. which down, feel less strong So, – to had is that XX%, results be about were down base the questions. Thanks aggregate, the revenue And continue testing, and across will underlying the of but is was the was outlook good in roughly feels asking core that quite and things level good I sort, that in disruptions there that. COVID of diagnostics. and And but obviously we like

Operator

please Thank question Puneet you. SVB go ahead. next of And comes Leerink our Puneet, Securities. from Souda

Your open. line is

Puneet Souda

Thanks questions. Marc. Hi, taking for the Yes.

mean, into clinical and trials the biotech it early the one you and are at I would say the no from for what maybe board? which down what funding, could There are across near-to-midterm questions growing at PPD investors clinical if pharma us the other across and stages you if businesses biotech here your around obviously on have funding [indiscernible], that's you're but pre-clinical in point really could not and question at you case fairly outlook, pay vantage all. you quarter seeing overall, asking been outline you markets, look provide of maybe is first a look projecting and this large end us view overall? one So the that

Marc Casper

Yes.

mid-teens. be about market, in a the would better as our what organic would So you biotech because mid-teens strong the but included do history, the Puneet, opposed than market, you if PPD if growth that – end as an I incredibly everything it say the organic, with all core description end end in think numbers the it and we gets pharma on too to organically is market to confusing basis

So strong. business the is outlook we've our the we reviews strong, And is very So activity base? of right? talk strong when very are about orders and – what have which we is and different within is a Actually, very good they completed the good. good really our customer indication, all those now level the is seeing outlook future

we're them we XX% facing. We to were through you through ago, years the helped our the is at able way with years of pharma growing That core that that had to We helped doesn't outlook even to navigate way customer end right? bullish our I'm will a drive they and but is. years And X% need our little and like clips in those work but we dynamic large perspective, think we the pharma above revenue, level, be biotech, challenges grew is it. needs ago, it kind because given to long-time that to XX-plus of we take that hugely. nearly right? X% you strong X% half And productivity a our and growth I organic biotech patent pharma growth, growth. we've can long-term was really that, and and what and you well here one So years and so a say right? the rate when quarter, customers it XX% actually flows biotech, your was through deliver given assumptions, I X% and to longer market last years, super growth a at in the grew through our than So even Pharma that math attuned been about around in in the about remember company to a more than have growth the a it's when be

about think I and I great is. about outlook how that's what it, So feel the

Puneet Souda

helpful, super Marc. That's

this you mean, obviously looked you targeted the clarification driving on strong we to technologies, the to seasonality elaborate this of with when elements. strong. Stephen what's Just first the analytical could came even mass meaningfully maybe And microscopy those pointed growth. quarter in from fourth a electron of couple it that a at was quarter, spec I it normal

in first the strength end Thank you. the look and at you when the markets driving of instruments the quarter what's customers? So

Stephen Williamson

Yes.

So question. great a Puneet

really had great across Analytical two I life semiconductor very the highlighted I is including business, significant few Instruments bookings then we've great of think about now customers, the contributors aspects So beginning great electron Chromatography growth growth the that material for quarters for all well at of strong that and as most three for as customer Mass position is science microscopy a for, segment. that as in And and mentioned set, that and the strength in serving applications applications in science in terms Spectrometry as well. Marc

it's across the for is broad-based a funding good there end So market. environment been and strength really

Rafael Tejada

the for Thanks Thanks, question. Puneet.

Puneet Souda

guys. Thanks

Operator

Thank Stifel. go you. from Dan And ahead. please question next of Arias our Dan, comes

is open. line Your

Dan Arias

portfolio, but taking just the there across morning on the when through going there? there's bio-production are obviously is piece culture Marc, Thanks trends nuance COVID, upstream lot comes the a Good cell curious that guys. beyond ships versus on, are for have just to you to that mean, I the questions. work any noticeable place to portfolios it of what's downstream what I'm seeing? driving you're any whether in

Marc Casper

that bio-production performance the No, strong. in media, performance technology. we analytics actually reported. other at purification about feel that way. And I good the good single-use I cell very culture was pharma obviously and resins, in our companies had the that strength defined looked

nothing there's that that gleaned in of we no, terms of So sort there some actually, difference.

broad-based to strength. quite its actually So

Dan Arias

Yes.

does you opportunity just global the seen stack just up shake disruptions terms whether of regionally these of see. the noticeable How tend with in Okay. that And players? you on some the then the and sometimes China wondering share agile or less out I'm you've of there to maybe scenario that or the mentioned. just that what thought more the baseline it's operating smaller that's becoming if sort being

Marc Casper

Yes. how We're others performed the in China at still in looking quarter.

doing and about feel team's momentum the I broad nice good job So base. and is growth a our double-digit

it to well So spectacular is doesn't the the Like pandemic back very as and surprise business business really have. of our navigate experience our that a and so that wanes. the challenging customers value do and me them the help for capabilities we'll we China, then as we depth customers get scale in create performing with usual the time that

Rafael Tejada

for have question. we time one Operator, more

Operator

you. Thank

please of Our today Sykes Sachs. from last question ahead. Goldman Matt comes Matt, go

open. line Your is

Matt Sykes

yet the bit Are industrial Great. relates Thanks a secular drivers the as quarter. the another that end growth applied it strong quarter. to you Stephen. wanted and on more I down Marc on just some little of drill underappreciated growth the being Congrats to instruments, is beyond market there are and driving maybe drivers, think by we talk And this maybe of last you secular some about identify maybe growth saw them? market pent-up year? can just above the if demand some

Marc Casper

Yes.

So Matt thanks for final the Yes. for question. the thanks –

Stephen demand in really really; said really that year. would this revenue the really I the one business technologies, for to very That's battery say our are humming businesses life materials, business and good a broadly continued Instruments end-market is bookings. I growth and strong growth really into well. as call the really next. So the really outlook strong material and and science the semiconductor science healthy science and applications, doing Analytical of Good that related But is the instruments material what well, had growth. well the not I'd really and strong very advanced growth start implying that's the business is doing say that the and bodes for year

highlight. thing I'd So that probably the would be

Marc Casper

wrap let the question me And Thanks do quick today. a for up.

for for to start a updating upcoming May Scientific. joining at good with everyone. Thermo on thank Thanks We're you strong thanks and And the we're to support look your Fisher achieve So in position Investor excellent the another very our XXth, everyone and I always, Day of you call. very pleased year. as forward

Operator

Ladies gentlemen, Thank for thank this you. and Thank call you call. today's joining. all concludes

now disconnect may your. You

Thermo Fisher Scientific (TMO) 28 Apr 222022 Q1 Earnings call transcript