Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2023 First Quarter Conference Call. My name is Charlie and I'll be coordinating the call today.

You will have the opportunity to ask a question at the end of the presentation. [Operator Instructions]

I would like to introduce our moderator for today's call, Mr. Investor President, Vice Tejada, Relations. Rafael Mr. begin Tejada, call. you may the

Rafael Tejada

for morning and us. you thank Good joining

with May is be thermofisher.com Williamson, News me Chairman, call webcast our Please the On today website is call the XXth, Chief and Financial Events being Officer, & Investor note President of this President and Marc heading Executive and on Vice under Stephen will XXXX. the Senior live Chief until Officer. archived and our Casper, section

our heading of in release quarter press XXXX of available the of copy is first the our earnings A website Financials. section investor under the

So of before may Harbor make me Safe the under the forward-looking plans Litigation cover we statement. company's the our constitute future expectations, Harbor Act provisions we Safe begin, Securities of let XXXX. about and Private that purposes Various Reform for remarks prospects briefly statements

those report materially Investor including important these Actual the annual recent section in from Financials, statements may available website the discussed SEC is which of SEC various heading those indicated results of and Filings. a under the factors, file in on as on XX-K, by with Form most result company's our differ forward-looking the

representing elect today. specifically views even change. to point at forward-looking update the future, our as should not do subsequent in you Therefore, of date forward-looking we While statements as if these may disclaim we statements to to obligation estimates any any some so our on rely

release heading also the earnings first principles in comparable in these GAAP. we our measures of will most XXXX with A our section this call website to to available accounting of quarter and the available financial Financials. the in GAAP financial not Also under the referring or measures directly non-GAAP Investor press is accordance during of certain measures generally accepted be prepared reconciliation

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

Marc Casper

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

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

core very Our is performing business well.

the I'm share challenging context our pleased of especially company, macro and within more slightly with across saw we execution gain the team's the environment. great a

is and with success Business is us strategy PPI status growth System, proven earned customers a excellence our that partner continued and the of we've our differentiator within that which Our operational result enables the company. our for trusted

let So the recap me first financials.

Our billion. the was $XX.XX revenue in quarter

was $X.XX another income operating quarter performance, and EPS adjusted delivered adjusted Our share. of we billion achieving $X.XX strong per

and year, the ambitious demonstrates of out we XXXX for that guidance beginning the against delivering At QX appropriately that. set we're

markets. our in end very outstanding QX, in execution performance gain. meaningful by our to delivered We turn strong me driven from Let team, resulting share

related Pandemic expected had we as the during quarter. activity performed

due in reminder, healthcare the in of therapies vaccines diagnostics the from and and can testing. biotech runoff to the COVID-XX pharma As impact be and revenue a headwind and seen due to

color give you end our Let some me markets. on

with Starting quarter. and digits delivered pharma the We the for biotech. growth mid-single in

During the the strong performance and in our grew high-single academic quarter, mass and businesses. digits the research we government, In clinical and in chromatography pharma services, we in spectrometry quarter. very had

businesses, chromatography strong our and electron in microscopy, including applied, digits the including analysis businesses, mass the spectrometry. regions. grew and as our mass we channel. for all as quarter. all saw and government industrial in of In research instrument strong well chromatography, the and high-single We in across of analytical chemical growth strong market and were growth electron delivered Academic range demand spectrometry, We a microscopy, safety

us growth us to and which year deliver up team core an lower and diagnostics revenue quarter. in the our approximately was led by during good prior brighter very now enables QX, than I'll business to proven Finally, strategy, and turn even setting for differentiated future. microbiology immunodiagnostics, businesses. to transplant continue diagnostic our growth delivered in The the care, health XX% quarter performance

delivering year our our As scale in a value and high developing customers. had markets, consists growth high products Starting the our leveraging and with to products, innovative impact the unique a growth the three start as emerging our to of strategy impact, reminder, a first an businesses new high new proposition of number launched we innovation. pillar, first across quarter. We during excellent the pillars

These trace In further analysis, and including as of beverage. technologies heavy water samples, the ICP of Plus RQ elements to Analyzer. spectrometry by new elements in strengthening as the in are identification food soil and elemental launched system we ground mass important This simplifies Scientific their metals leadership analysis in well iCAP Thermo customers break industry our enabling our complicated ICP-MS toxic in work.

launched and we automated cell This increase microplastic-free cancer In Q help including life Applied to DynaGreen, environmental and QuantStudio builds digital research, productivity Biosciences PCR of innovation Sciences, long dPCR and Genetic Biosystems Invitrogen our beads an business, to solution and the in molecular reagents. research. our the therapy will bioscience launched product new market magnetic research for gene AutoRun impact Absolute of our protein for on In leadership we the purification. reduce Suite, history science customers

our I'm of which crisis. on pipeline broadens Scientific the of a across we extensive Tramadol the fight drug in year. portfolio few the DRI throughout be going are excited Clinical Diagnostics our help examples abuse and robust the assay, toxicology company, to These products And that launched about new innovation business, opioid launched Thermo assay will of with our the a just

culture. This a learned nice was on award in Thermo new Fortune's innovation product track and Companies ranked our A Most recognition number and team their recently record. List. launched XX XXXX really also based on Innovative that Fisher of is and a company's We process

growth of a growth to high differentiated leveraging emerging strategy for pillar and our in the our markets create customers. second is scale The our experience

cell Suzhou, our strengthen to opening in facility culture markets site continue We Gibco these rapid our capabilities prototyping by at a existing China. new serving

of will manufacturing and quality ensure receive purity. will customers their level to cell the also It safety, therapies This current patients production effectiveness, culture practices. regional help into manufactured facility accelerate of transition the highest media good

Turning of pillar growth third our strategy. to the

We cleaner meet had healthier, clearly is and make enhance the by beginning our strengthening with the opportunity of our dozens pharmaceutical proposition year, I've continue to to our customers enable and our of value our value the and resonating. safer. to world since customer proposition capabilities customers biotech to the

Our that trusted early us an scientific gives partner that status ability unmet understanding to customers for the insights collaborations of breakthroughs. advance generate to and deep needs allow continue

California, other myeloma in cancers. cGMP development for therapies with accelerate exciting of we QX, cell our Francisco the Manufacturing with University Center San milestone opening During the of to the of a an breakthrough therapy new partnership Collaboration strategic and and glioblastoma, multiple achieved

other clinical we and cell therapy the offer development, commercial facility, customer research solutions like to UCSF transform to clinical Partnerships for discovery from potential care. have this manufacturing. this to In through

our of the be drove example proposition of status excellent customer and performance customers the seen Another established very research growth with trusted biotech business, the we our partner and which in that strong our can value clinical have pharma quarter. in

excited market. also time clinical the drive by drugs The projects longer to research that engaged to reduce of parts business and the customers and company. and I'm ways short-term the synergies other We're both to on explore in is business. term to term will working both very momentum benefiting of longer our growth revenue very continuing with cost build and is the bringing

the businesses both we together, within patients. of and clinical development capabilities are our improve the expertise research pharma process, and customers and services our effectiveness to their bringing our working By drug benefiting

delays customer. to that We visibility the development an from is and and have resources making pilot data to potential enhanced underway to provide technologies manufacturing real-time speed dedicated decision the clinical best-in-class This exciting utilizing of and reduces to capabilities and trials. improves

also a clinical process. are nice help our reducing the example can is really partner. take cost the out by It of why process in customers trusted This waste the supply of we

and during the navigate As always, culture every PPI Business and enables productivity find PPI our improve empowers customer also us enabled and quarter. to to way success environment. colleagues experience, our mission while a helping dynamic our all to better System of a us driven day, it quality, the our engages and

customers Business our analytical helped to System appropriately pandemic in activity manage and and impact runoff and costs. You our can us QX. results the from effectively It our has to on also and see also is us demand related for positive the of address allowed strong capitalize the instrumentation PPI

fantastic capital Diagnostics capital a to to returning M&A excellent active this an as The is the great we're shareholders. had our beginning We've It's deployment. to Specialty business Moving capabilities make leveraging our start closed of acquisition take and in strategic the an of business our fit year. business to better. of have even it the business both with Site We the year at the Binding The part and to company. now and

performing very is and integration of is going tracking very The plan. the business smoothly well, ahead

multiple excited by advancing myeloma We're team of opportunity diagnosis Our and and this great. management on and with disorders, immune innovation the area. is patient the focused advance pipeline patients looks care further in to the

the repurchased return and terms capital, of In XX%. we $X our billion by of increased quarter, dividend of stock during

to start deployment. the capital from year great a overall, So,

During and our including the quarter, by with we governance all agreements power to XXXX. priorities, energy social sites current advanced also renewable environmental, XXX% securing US

a significant a contribution X emissions. XX% in and gas to of X greenhouse XXXX commitment our is to reduction This Scope

zero from As XXXX. renewable progress we carbon our and accelerating net towards fossil away our to continue also by transition we're energy, fuels adopt to commitment emissions

give Corporate continuous our report we're our later a latest We'll be Social and will stakeholders our having. really substantive positive releasing improvement on and this the quarter impact that view Responsibility

We're Since our turn environment the revenues and billion now EPS more us System, Business challenging. details will has the through that ambitious beginning outlook $XX.X the you stepping become and growth strategy, full PPI year take our our year, the guidance. in up Stephen $XX.XX. with to powered slightly maintain his me by macro challenge of adjusted to Let proven is enabling to our remarks. of of

the So to key takeaways from first quarter. our summarize

Business driven results proven growth in and System. strong very Our strategy QX PPI by were our

is Our well. performing business very

customer partner unique is our elevating trusted status value proposition gain we're market Our to and continuing share. further

create shareholders, our to even We we incredibly future of capital XXXX significant value positioned brighter and an our and our build for stakeholders and we're create to all and customers well continue effectively deliver an performance excellent for value to as deployed company. differentiated for

With Stephen? now CFO, over Stephen call that, our the Williamson. I'll to hand

Stephen Williamson

everyone. and Thanks, morning, good Marc,

strong saw started release, As the year QX. very you our with press in a we

enabling and revenue is navigate our effectively organic growth core us System and company macro environment, Business to strategy in pandemic PPI by drive revenue very dynamic growth the runoff the gains. powered to through manage share continue a excellent Our related

$XX.X quarter, the delivered which X% of delivered adjusted we In billion We growth. core $X.XX included organic revenue revenue, EPS. of

previous and adjusted Our X% we our was XXXX core organic had ahead. EPS higher than incorporated $X.XX revenue growth guidance, in was

year. start the So strong to a very

now provide details me with more you Let some performance. our on

QX. in quarter EPS results, So beginning earnings we delivered as $X.XX. $X.XX adjusted EPS our in mentioned, GAAP the with I of was

the foreign a from QX lower of lower line year-over-year. reported X% X% revenue top of acquisitions The On organic headwind exchange. included X% revenue, and from components X% was revenue contribution our reported a

Pandemic we and This revenue. related revenue came in vaccines of expected $XXX is comprised million therapies QX. of $XXX of million testing and revenue as in

earlier, mentioned which change in organic And was in as X% core core include growth growth to I of the quarter. in therapies organic revenue, our headwind reminder, revenue COVID-XX As the revenue quarter was a a continues approximately the X%. and vaccines

So of our performance showing strength the core business. continued very strong

digits. declined Turning rates by America the QX, in and declined current by Europe The in by low-double skewed growth high-single digits. related to pandemic performance In our are revenue the North revenue organic year. organic prior the geography. region

Asia Pacific of grew declining the World with Rest slightly low-single high-single in declined digits. digits, China and

quarter, and our than strategic investments. to lower was than points XX% performance, driving income strong and quarter offset QX was inflation last operating achieved strong in the This price adjusted productivity. while the more realization related XXX lower we revenue pandemic XX.X%, decreased year. operating respect to margin address effectively operational by In basis With adjusted also continued

company gross basis XX.X%, the in came in adjusted quarter QX margin points last Total year. lower than XXX at

change For those our the gross margin. for the in drivers first quarter, margin the operating same as adjusted was to due

QX, was expense revenue the of Adjusted P&L. SG&A innovation. details million a XX.X% to in was the on of high reflecting R&D revenue. in was impact Total X.X% our Moving in quarter. the investments ongoing in $XXX percent R&D of as quarter manufacturing

due the Looking which quarter expense at QX capital year, $XXX was mainly than $XX to higher last the million million, our for deployment. line interest net results and is below

our tax This adjusted points than year, the Average $X share XX%. was lower million diluted in QX tax is the by in reflecting repurchases, XXX million QX, Our of activities. approximately quarter lower $XXX of dilution. were last year-over-year, basis net results driven rate option planning shares

million. $XXX the after expenditures. net cash capital was Free sheet. on operations $XXX from investing flow flow million Turning cash to Cash balance flow was $XXX for million in QX

of billion for deployed and capital During through we of shareholders the quarter, return Binding The dividends. to the capital. and buybacks acquisition $X.X $X.X of Site included billion to billion This $X.X

$X.X We of ended cash the total quarter debt. and billion billion with $XX.X in

Our ratio the XX.X%, X.X that and at debt leverage EBITDA the adjusted our returns strong X.X was on comments a of performance, reflecting was times quarter across net to investment company basis. Concluding the end company. the my were ROIC times debt gross on adjusted generating on total

Now color on our of segments. provide some performance business four the

Let couple our me significantly by start year. pandemic prior varies of The higher segment, revenue margin in with that the of and scale revenue a comments. framing related profile and was

rates and skew So margins. that does some segment reported the of growth

execute continue to across strong segments inflation. higher to pricing realization We all address

than XX% Solutions. revenue lower ago moderation prior related segment the year revenue driven reported and declined the Science in Life with quarter. in starting segment This by details the segment the pandemic to in year the quarter. XX% QX organic revenue the was on was versus Moving

delivered QX mix productivity, due Solutions versus than Science by year higher quarter, XX% In the to in adjusted prior the and volume percentage revenue related we which the good quarter. QX significantly income XX margin more XX%, in was adjusted operating XXXX. pandemic points unfavorable down decreased offset Life was operating

XXX XX%. increased growth Instruments up year-over-year. Analytical the points In in broad operating in and volume partially and was the delivered was adjusted business mass growth income pull-through, favourable the in electron adjusted reported and spectrometry this XX.X%, QX and increased XX% by The chromatography and strategic was the XX% quarter organic In segment productivity businesses. led quarter, revenue strong we mix. basis operating segment, by strong This margin segment the microscopy strong was offset investments. based QX

see immunodiagnostics, quarter. the microbiology QX, Turning the revenue pandemic declined than In reported we was and ago underlying to core year transplant led lower businesses. quarter. diagnostics the QX, was to growth lower versus organic XX% by offset Specialty Diagnostics. our strong in and XX% revenue revenue In This prior continued related year by

operating income in operating than points adjusted XXX and margin higher basis which XX% QX QX XX.X%, is was decreased adjusted XXXX. the quarter

quarter, partially lower productivity, offset volumes. mix of and is the the favourable business delivered strong testing which by we COVID-XX During impact

Finally, Products in Laboratory X% X%. Services and revenue segment. QX organic increased Biopharma reported and growth was

pharma businesses. in growth this led QX, segment the research and During clinical was organic revenue by services

margin strategic higher pull-through. segment XX% than was QX increased adjusted operating income offset quarter, which in XX.X%, is productivity the delivered In points QX XXX the This operating and XXXX. basis adjusted by strong investments. was we volume and partially

revenue and macro year, a we maintain we the expect is guidance. effectively me and Let the revenue the overall guidance but achieve turn XXXX, the planned and from year guidance of core how consisting Marc it guidance, financial as billion, outlook. organic $XX.XX. environment of our navigate including our now outlined, of $XX.X start EPS dynamic change no we're maintaining of to There's in full to strong ability guidance our growth to this net adjusted way different X% for demonstrates And at guidance very

initial guide, mix adjusted $X.XX of the through our headwinds FX. additional Since to $X.XX headwind business of and EPS, actively about $X.XX cost We're this from see below line. $X.XX through all management offsetting and actions $X.XX we from

dynamic is the overall. navigate Business So macro company very System effectively a change no The net enabling through us to PPI environment.

reflects the As strong I XXXX mentioned, a financial guidance very outlook.

of some key previous the from remain of the you remind me Let that guidance. assumptions underlying unchanged

core market We continue of to growth to revenue growth assume X% organic X% X%. from

worth in of our vaccines expect noting X% growth. business. majority revenue we in core prior therapies year, of revenue, in is less organic services XXXX is therapy the to that on a revenue that vaccine billion revenue This expected than It's core pharma and XXXX. $XXX impact the $X.X and Within our million be

line, year. $XXX With testing Below to interest to this assuming regards acquisition to be XXXX. growth net approximately assume in expect the we revenue, to We're contribute for $XXX XXXX $XXX will we Site our revenue The continue Binding reported expense approximately million. million million

is be be XXXX to assume year. billion that cash in net and assumed for flow to $X.X expenditures continue We free billion approximately capital will $X the

January. guidance to the $X estimate completed assuming share approximately count increase this we billion will Our average And in be were year XXXX. million buybacks, we're which We through full share shareholders approximately million $XXX XXX year of return includes of diluted shares. already dividends, XX% a capital over

now turning to that So the changed. have assumptions

assumption FX of to $XXX expect I As a be tailwind mentioned earlier, revenue FX the still changed. has We year approximately or million X.X%. our for to

However, a headwind changes and of more guidance the $X.XX we currencies. to previous mix in the of That's EPS headwind a our to it now expected due expect of $X.XX. adjusted than to rates be

assumes from I XX.X% assumption for the to be be XXXX in slightly adjusted XX.X% the year. has to the guide. The for year. to operating finally, expect Guidance full improved We wanted to the margins initial quarterly rate on our now for touch phasing for range And year. tax adjusted of it XX.X%

expect initial we of our revenue full currently and in of a and We're the half Compared of phasing to full approximately adjusted now higher our EPS weighting slightly the that dollars our dollars. first year of of assuming assumptions, second the year adjusted year. EPS year half XX% represents XX% the revenue

organic all in the year is conclude, mid-single our at model for digits, slightly XXXX. we differentiated very to probably be deliver expected in To growth stakeholders best position to start lower a and to strong delivered QX great than core a we're QX. to performance

back turn I'll call Raf. the over to With that,

Rafael Tejada

call. of ready we're Operator, for Stephen. you, Thank portion Q&A the the

Operator

Jack Instructions] of comes Research. is your go Please line question from first Thank open. Our Nephron you. Jack, [Operator Meehan ahead.

Jack Meehan

Good morning. you. Thank

services. biopharma products, is So focused lab my question on

on PPD. is First

this signals customer your all? Marc, Has assume? that can How about this been trends to demand. around perspective. grow outlook you would at seeing? getting What I love And then does changed we've get biotech did Thanks. that So the PPD far you're award talk quarter? so earnings some mixed

Marc Casper

Yes.

Good for thanks So Jack the morning. question.

very start be level business, a it's continues to of in doing research really had growth had the We clinical strong well. PPD strong authorization. Our good to had backlog. We the mid-teens. year. The And

So that business the revenue is continuing benefit to from synergies.

You've go to Environment a about good I'm and of but numbers more challenging, come is definitely is and seen excited bit good a business. capture the job doing a year Team to into start job little executing. the is prospect. doing really out very this team the that the

Jack Meehan

Great.

And hear how the love segment just is performed on any you channel you're around research then quarter. core to your that share about more just that demand dynamics Thank you. color talk Okay. would and one this Can market seeing?

Marc Casper

channel has growth. done customers number a Our our sure make quite the for channel to consistently an of business, Scientific that plays role well doing years. they're It do amazing really enabling and effective Fisher actually in research that way. do our sense And an it good and share they has good a had continues to win And the start. in best off is efficient to customers. dynamics as on It business

So well-performing it's a business.

Jack Meehan

you. Thank Super.

Marc Casper

Thanks, Jack.

Stephen Williamson

Thanks, Jack.

Operator

you. Thank

of Our your next open. is Please line JPMorgan. question comes go Rachel ahead. Rachel, Vatnsdal from

Rachel Vatnsdal

morning. taking Perfect. the Good question. for Thanks

your half, And visibility historical months. have XX of six bioprocessing nine versus within being talked to more about visibility peer like so recently of two first months three to pressured to

between your large and walk having versus does PPD impact level of that visibility? biotech these can current us also, how through pharma And visibility your within what's that level business emerging there? different customers? you of of So just some customer then And sets is

Marc Casper

Sure.

participants level step read So, of for of first, and other because I'll talk question reports some so I a then as the up the the specifics Rachel, and Maybe about I'll far. good look industry question. the morning. Thanks

I we And when ambitious quarter that, every that XXXX, a we do industry. year, right? as the we out in started Clearly, And goals the year. for reminder, noisy when a set frame

perspective core us, For from against comparison earnings. a organic have X% also XX% and a very strong an growth

the So into that's sort of as year. we came

guidance. So what's April Xst February set versus late different in out our when we

Well, the the right? a great first chart Great thing is, we year, delivered QX. to

leads economy, challenging, the sectors slightly more a pharma with of environment macroeconomic And to and more is life right? science cautious services. in do to Second, spend nothing that tools the all

into of caution. couple our a original excellent in of slightly that Within had well see our instruments we as company, business which and better business of now performing the But analytical and also our for that own in more QX have customers our our and that's QX looks are an visibility that we businesses some than encouraging. terms guidance,

Specialty see headwinds which doing more a is with also a bit question is the our Bioproduction, is to really business half in little expectation. guidance than original first strong second original better our we're focused, The Diagnostics than is where start. your going

It's this get quickly. against completed -- benefiting because the driven delivering really what and we're times about lead is products And network here. the from feel are good can a we So improved our view temporal the customers by expansion, more our brought right? long-term that prospects customers our phenomenon, we is

terms things. terms In and the customer by and in specifics sets visibility of those of

related to our is is, the is the the I incredible an has incredible visibility a second think in good terms for growth. tailwinds. I of it this the it's half in way high the the It's year that because many is think of first years long-term, about view. expectation the with that than very half customer past production. year grown of and great market It reasonably has better And

of revenue. our As reminder, XX% represents Rachel, it a

that So I keep as to context the in it's think important well.

Rachel Vatnsdal

the XX% Great. instruments. Instruments one on Thank quarter. Analytical just then you. during And maybe grew

that versus far one that's areas expected that's than better of your You been the guidance initial flagged the so year. for

expectations you Instrument then growth Analytical for walk any year? what Thanks. the within latest faster that through there just So than growing markets us are for end expected? are And your AI can are

Marc Casper

Yes.

out bring really of our products. terms business, just benefiting continue are strong we So adoption right? our instruments from very great innovation, We of to in

continue our it. during we benefit and you're fuel As R&D a and accelerate pipeline, the the seeing pandemic, to reminder, of

move the nodes, semiconductor the uses of on next our capitalizing to are which generation to We desire electromicroscopy.

incredibly our enabler technology with business doing well. microscopes key spectrometry chromatography battery a We're and for our mass and

the Obviously, here the is So strength in strong. XX% the growth very based. quarter, broad

we of the level expected QX. a the the will we said would that, than less QX. moderate is and be moderation at expect in second growth of in would year what beginning in think that good we half, had that And We originally

be solid to report it we'll to when QX July. QX, have a more in expect we and obviously visibility So we

we we Thanks, little have we and to. QX So we're is than because expected better this assuming Rachel. visibility at expected that point what QX that's as

Operator

you. Thank

Our comes next of Bruin De Please Derik is proceed. from your America. question of Bank line Derik, open.

Derik De Bruin

morning. Good Hi.

about So I'm talked curious guide you've tougher. the being market little to right and about Yes, some guess, of do much question guidance if and you're offsets markets because a room things little offsetting guide now. I it's your bit further the there. in Thanks. ambitious you're maintaining a into Basically, confidence is there like built curates sort is that how it? further leeway additional

Marc Casper

Yes.

So would Derek, differentiated the manage be year right? performance way given proud strengthen to that deliver long-term, a thing is of we delivering the in first right, want company and we we for that company, the the the

many served has And of very track principles well look of the that's principles. for record, a and our of when long-term. And set do set short-term job strength delivering And that us the years. in at we good first you

assumptions we and When out point the about I on the around of good has the outlook the that full laid for for of the time year changes the we've year. based year balance how and played this in we guidance the some out and think about where at are QX feel

too numbers. will time, we'll are to going If assumptions these over guidance And if those a assumptions position. plays in right? adjust appropriately are those If those beat aggressive great largely way be too assumptions we're then are conservative, out, we year the the

dynamics. the And good our I'm we're outlook any feel not I you shy of QX making. to We assumptions based about try total on those about transparency and give and that

Derik De Bruin

a because business just some getting inventory more dynamics a COVID also upstream little obviously And of and why on space? bioprocessing mean, it for vaccine moderating focused the is the in bit downstream different questions can than ones? And the a lot your it. and you're about And expectations Got other whole in know that the on back, looks you element. more is just your of have business going little I But maintaining you some bit you like talked talk we're bioproduction. about I issues. some

Just clarity a little Thanks. on bit that. more

Marc Casper

Yeah, sure. Stephen?

Stephen Williamson

for second pretty I the business, it's can the pharma set much of in business. all $XXX revenue our and for million Just level not XXXX, in on the vaccines therapies. a bioproduction actual That's Services

Derik De Bruin

it. Got

Okay.

Marc Casper

Yes.

think about vaccine, dynamics the my out Stephen I anticipated played we COVID the where mean as is, said, almost I QX when take when here, on exactly it's So exactly. is activity been look $XXX at the have to it good there. terms that and that very contracts about our visibility the we know because in I feel of we million, what has booked we

pandemic, So out that's pretty and is for say the vaccines trying Huge to and straightforward. back in and demand, response more therapies were go pandemic. would to generally, for right? bring the what successful practical products. bioproduction to I When I that to think about very right, the the unsuccessful dynamics these Those companies

For times products, Customers lead times on dynamics, how varies it really Obviously, order differently don't us for well not media much stressed got stuff this It's companies use. single but to That lead want all super our be that specific because nature they're right? those of are the one very by of you everybody. and these things to our the right? different how capacity, extended, culture campaigns cell in where and extra. stockpiling you're leadership running,

bring simple. If back we XX-week lead XX becomes have the going through for say extended them because know they weeks customers simplicity, lead to they pandemic, work they XX because give the have to -- that visibility. dynamic which during will very When time we So don't product, to ordered into was a normal right? XX you weeks with order weeks the what quickly we're order time, as

themes said our incredible throughout we one work super was around dialogue. that the the closely customers And pandemic we like the with of

to when going So say. trust we deliver that they we're

when So they times in didn't now. lead the over got ordering they're time appropriately extended and order

put So can And going to diagnostics, starts this month? have originally good bit news is is first you that No, a the than offsetting view we up. pick second had be not. call that in little at the between especially reasonable to a half our expectations But instruments, softer to the that half point. the of course, we it's

So hopefully that's helpful.

Derik De Bruin

Great. Thanks.

Marc Casper

welcome. You're

Operator

comes Dan, is Brennan question Cowen. your next line from of Dan Our go open. ahead. Please

Daniel Brennan

us Thank are. year. for Fans I Great. questions. to the Rodgers get organic guide up call you by had Thanks reiteration conference Marc, you. to for for went the to be the core you for draft. trade excited hope while we the Thermo. before giving The the to have Jets wait Aaron

consumables to So CDMO some be context rates and the for to I components the maybe you're just you last for share your the thinking biopharma know color How about of on just bioproduction, sense biopharma us year? of with but gave PPD, a trying breakdown your your for for call, a within growth get question outlook willing us Would different there. the business outlook you or the the a just on PPD. XXXX.

Marc Casper

Yes.

thanks Dan, is springs good the hasn't in biotech So my for eternal hope in [indiscernible] made pharma a But the football spring, from And question. effectively, question. perspective, yet. because been and

what's where therapy And and is take the about rolloff -- on you growth, market let's from think embedded prior delivered If digit the we you quarter, the obviously think that's right? when year. the that about vaccine is I itself, focus in right? When mid-single

as exactly did we it So we expected.

normalization growth try in have that you'd to didn't you a and have big double-digit make vaccine to have therapy if you segment. basically So that a it double-digit simple, not just growth, rolloff, but guys,

trajectories the that. So most change of from around

given while pharma moderate. we're This second year, remember that and to therefore customer XX%. be grew growth is expectation, is that last more our to expectation we year, to moderate going grow and last year we thing think our largest The -- obviously, outstanding obviously, X%. biotech grew the is is growth, segment, is than our expecting I the will

I would we to QX say thought pretty was a softer. bit be largely, being similar little bioproduction what it with would

that there's bit so think our You in And customers. different? don't, the in say of we a strength But have mix. I dramatically little other more it's like can through parts biotech we're I do right? and caution smaller working

manage really businesses bit it that And the we side, about by a where way. And that's On of represents revenue. in said XX% they the I customer side, on total, kind earlier, our of bioproduction as of don't little each are. the of details all

Daniel Brennan

for Marc. earlier follow-up a instruments. on Thank as maybe you that, on Great. then And question

better about talked You visibility.

is you what as about gains well. share a So talked -- lot

us of bucking you other trend couple how peers seeing strong after are could So somewhat give the sense a maybe you're years. that a the of

above still seeing You're corporate citing comps. growth, others kind more of average are

between any your for us and AI LC-MS in geographies you strength FEIC, driving want to business about XXXX? with what's or anything the share So

Marc Casper

various good right? things They're happened shipments supply a high our the couple out years level Yes. winning doing The that at chain navigating job good on executing, over going are of and team job business. the last is a doing we're a and

Customers has relevant. the are that's been when breakthrough executed products, or Over that innovation. of around I mean I really strategy the my have think great experience. them. want team find periods time products the money customers if long you

been a certainly that's So business. positive dynamic instruments the for

to will off We're would bit but comparisons better have growth little second I bit I challenging would And a year. we we definitely a being originally this than say QX in expected. start. half, a the And good moderate that expect is what

Daniel Brennan

Thank Great. you, Marc.

Marc Casper

You're welcome.

Operator

you. Thank

Our Goldman of next Matt proceed. comes Please open. is from question line Matt, your Sykes Sachs.

Matthew Sykes

trends Europe the taking quarter any color in Maybe Good trends. and for my incremental play you the just on morning. or first what over outlined questions. across Thanks your on some those China, but sort Stephen, this year? growth you and seeing, just business China course for think how in regional of you're of Stephen, out of particularly Marc Hi. that the

Marc Casper

Yes.

pretty thanks our the of be QX slightly to quarter, unwind that better expectation I policy. was year Matt, in going progresses, for China, first see actually it right? out some the question. still as So, the look impact you'd down was the will So of that COVID QX we expected the of than China for played Zero much And the was continue in there. When as to quarter strengthen slightly. from business the it at the

high-single in quarter. digits was actually the The core growth

felt stimulus in say in did that good. quarter. the we the I What happen first So expected It happen quarter. to first would is,

was played government the see It the So money that academic out. to to good institutions. Chinese released

that our business. in see instrument You

out played that well. so And

a us market be And that's -- tensions Stephen, to the while. for real, through good China it, about that for And outlook. so a going are Obviously, anything it suspect I is we'll an geopolitical the this historically. I would should year around, has and environment feel be on navigate the and been good but

Stephen Williamson

Yes.

all markets, on through kind see I good growth the the when when end noise of from other lot that, geographies. main Matt, So really I there's think of a pandemic across but the of unwind,

to really out call there. nothing So

Matthew Sykes

one maybe just then on PPD. And level high it. Got

the proposition growth the of about it's attribute to peers. we growth executing base? Can might early And there. has it your in is still been obviously, kind potential outsized part Thermo a as just of growth Or that see been. represent PPD of that sort being customer value and talked that it any to impact outgrowing of come for You too this is

Marc Casper

is to there good executing, and a great customers a serving work a of They team great doing out our right? that customers really so They're think job job. right? are choice patients doing I are us, making with

high a of right? continues And authorizations what revenue a what lot We of in together, and customer showing of in I'm combination Thermo have clearly authorization new up our up brings now. shows It So That Fisher to level because there's excited. interest. build. brought PPD is of the

three. from of million And, Next a $XXX year. year assuming will be reminder, synergy we're that revenue as next year revenue that's a

is, performance the of and So of about good it's outlook. terms the feel in exciting I and it really business the where

Matthew Sykes

you. Thank

Marc Casper

Thanks, Matt.

Operator

you. Thank

open. go of Kumar Our Vijay ahead. comes line question Please next Evercore. your Vijay, from is

Vijay Kumar

Thanks first high question for level. taking Marc, front guys. here. question you, Hey, and for my my the on congrats steady

Marc? did slightly all, of to is thereabouts. bioprocessing Thermo's prior if pharma? biotech And end remind was is for your change CRO coming emerging it exposure just market you the could between that think X% from and early-stage corporate CDMO biopharma north guidance where what change, us change Did or at I -- about in

Marc Casper

Yes.

on the of year I the the the additional company. says provided XX,XXX beginning that Vijay, color is at views more I manage how focused, when foot set and end So which Steve at of think gave the like it to about we business the that we today, actually directional -- really our markets it's have the guidance context. And

stronger a softer bit little a in primarily bioproduction half. diagnostics bit the little specialty first Instrument

end markets, a but So would something biotech, nothing those into as that the I fantastic customer set meaningfully What a probably translates out jumps say little different. a that tiny that really is done within job early have changes are we the serving. in of great terms

here is Greater actually at community customer talking and that the but I Boston of this was roughly area. just because me like XXX the was event a members I energy rather such buzzing, And to like in in was Yesterday, and room not excitement. walking speaking,

difference. going why that? they're bringing science enormous are exception phenomenal. is that Because through to cures So is The an

So the the The there's segment, that we medicine. depending caution be is science a is molecule to extraordinary. company are passion more to the come to that an scientific great. going environment, in clearly And on advance from funding but people the improved idea

pharma majority doing a from large So and there. it's we've to well. position we're vast customers got the biotech we the our we well, And going revenue and do they're generate customers, and of strong love, that obviously

context of the hopefully to qualitative at So about gives think how that it. least you

Vijay Kumar

you. Marc. perspective, And follow-up That's quick Stephen one helpful for

Second quarter mid-single. guidance

will for second I comps quarter QX, easier below the in think get you said XQ. perhaps you

walk through So us thought the QX on process? just maybe

Stephen Williamson

is in guide outlined of Marc Really, in our terms as bioproduction timing just the on and assumptions. main the piece QX, the stronger instrumentation being change

Vijay Kumar

Fantastic. Thanks, guys.

Marc Casper

Vijay. Thanks,

Stephen Williamson

Thanks.

Operator

Dan Our your open. line Please Stifel. of is next ahead. Arias question Dan, comes go from

Daniel Arias

sort demand a for the this at is is Or Thanks there? growth the of sort something Unity the period business is seeing side, curious how acceleration on instrument we point? I'm this performing guys. steady-state in Marc, sustained rate we're that just of of can morning, light of here services that questions. Good this expect more of

Marc Casper

Yes.

So, I and that a as instrument thanks think reminder business, instruments. equipment the is, question. our When for is, we services about investors for service our what our of Dan, business fleets

work with biotech to things to run service people's their help equipment at the and as inventory, and them labs instrumentation. well as that they customers need do manage their also pharmaceutical of other done activities, those campuses We for our some

significant for of effectively. because growth tailwind because get business rolls so does we In do. the any So don't a years drive very actually the that growing over But instruments year the that couple volume of we've had have additional warranty or that's becomes last business that of in so is what our off, you demand. warranty, trailing as a revenue you a steady, incremental general, nicely the

part but cycle. to there the that of correct, this that's hypothesis one is at your So continues strengthen

Stephen Williamson

particularly themselves. Dan, where on then, electron microscopy And customers can't Yes. the business service

end up other standpoint, them can instrumentation. electromicroscopy that us they're So be customers But and from you service step lower for of from have that. efficient with looking help some to kind really

is said, as continued, that significant. So Marc continued that very tailwind

Daniel Arias

Yes.

underneath on themselves. anything Helpful. mention of some the Okay. better you, the Stephen, business some And doing then, an the that of units the are in is may than equation unchanged have businesses Marc while expectations have I of for others. overall, evolving that there things, just have guide slightly variables changed terms

wanted modeling forward. to just Thanks. segment and of sort those that just I So sum going we about trajectory up when think

Stephen Williamson

Yes.

changes. I key the outlined think we

Science hard Life for of the to kind as one business Biosciences that think vaccines model about where well was therapies all the thing QX segment. that's changes. Bioproduction. Solutions people That's think I in and is I When as

in think of year revenue that guide. that whole. change, That when most was, the a in change significant overall about going but But a stream I segment terms than from identified nothing point as that impact about about year-over-year headwind of eight as underneath as I So lessens still think on already segment. a think, we've other an I forward, is the that percentage changing in the that

Rafael Tejada

one have more please. we for time question, Operator,

Operator

today of line is of question final from open. Securities. your Please ahead. Puneet, our Souda course, SVB Puneet comes go Of

Puneet Souda

Good morning and Marc. congrats here. Hi,

Binding PeproTech their larger Maybe Wondering R&D both talk public you bit allocating they're the if seeing Just markets. Thank expectations year. Site. deals, outline two I'll from what did wondering little outlook stick about changing on to market there forward? deployment, X.X earlier and going XXXX, from is briefly customers? this a deployment question. one in capital you. private they're you're then Inflation how for sort you you're looking Could then Capital maybe how Act. participants of and hearing your your for the And Reduction I'm pharma just what in

Marc Casper

Yes.

questions. for thanks the Puneet, So,

implications what their of trial In in that and customers the and our does through clinical strategy. IRA, terms any that of making are what what's preferred the of adjust decision I working think the terms long-term about

We change intended were a haven't to I'm I sure certainly there's with lot to do. what dialogue this they know those make point? material trying do government. seen anything at policies of

you private less From is so equity my interest a deployment have forth. perspective because rates. environment because competition and certainly from good higher capital a From perspective, this of

pick think that helps at So think valuation. I appropriate and things because that's good always you get an but choose and I competition, there's

think I be continue we'll to active. So

busy like so I'm looking very Our at. we're what pipeline is super excited about

plenty You and never these available in on is know the going right how there's play transaction to But be if we'll things us. actually reality. out aggressive

So that's through benefit of performing capital a well the creating company value track the of and great record deployment.

Marc Casper

thanks for the So questions.

I'll a wrap quick do up. point I think this at

your our looking support updating on future you our a to brighter May and Investor we See call value for the Scientific. all for Day create So, York very stakeholders thanks, even you at quarter. company. today. in performance to to as I'm on XXth. Fisher our deliver New positioned or pleased joining continue always everyone, build on continue strong City We're deliver for Thermo differentiated virtually. as to forward for us upcoming well you We're an of to And incredibly thank

Operator

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

now may You disconnect your lines.

Thermo Fisher Scientific (TMO) 26 Apr 232023 Q1 Earnings call transcript