TMO - Earnings call 3 2023 | Thermo Fisher Scientific Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2023 Third Quarter Conference Call. My name is Ellen, and I'll be your operator for today's call. [Operator Instructions]

I would now like to introduce our moderator for the call, Mr. Rafael Tejada, vice President of Investor Relations. Mr. the begin may you call. Tejada,

Rafael Tejada

thank Good joining for morning, and us. you

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

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

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

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

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

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

Marc Casper

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

our financial seeing then me out economy additional the and Let for we're guidance. macro in what and context our the performance implications quarter, play the for provide recap I'll on

quarter, billion. was $XX.XX third the our In revenue

challenging. Our adjusted we and quarter. XX% $X.XX a basis margin expanded $X.XX to grew adjusted achieving to we quarter, growth the delivered X% more strong EPS, get to market XX.X% income third share. operating billion, environment in per the a very XXX continued our and We delivered excellent points adjusted increase In operating to

the to we're that you would best So guidance what I thought seeing on our update for be full it and implications the on year.

and a in spending core second market out economic be customer X% of by range in for two the driven China. X% factors: assumed we cautious coming quarter, the to reminder, year to growth the activity As low

As we expect same we market increased slightly in core September, year. indicated two now growth those factors in negative impact, be the for and to

EPS $XX.XX in later billion and guidance related year per $XX.X good as EPS and be the increase XXXX. and the expect discussed team expect assumptions revising and underlying the market for headwinds, the revenue in XXXX. We I with as to call available the thoughts to Factoring along job capitalizing faster be in macroeconomic to full than the to again a outline FX are conditions that help on will gain in did share. our now we quarter, the opportunities well Our to Stephen we adjusted XXXX. frame revenue adjusted some share for to once current deliver grow the in continue

tools long-term short-term System and bright foundation scientists strategy dynamic pharma differentiated and remain And to strengthening and performance capabilities to advance combination the outlook. times, us ever. industry breakthroughs pace successfully a needs. of for long-term the will are used our and proven as rapid they unmet our as Business navigate growth do, which by health providing prospects positioning enable So The position our addressing the for at ahead, the I as for our to competitive work scientific care and deliver look biotech simultaneously PPI enable the continues enable. is so Science our industry, that most they many important us

pharma me in and in for during the business. services quarter. by our in vaccine a this turn this therapy segment. in market the end and declined our X% quarter, markets, starting now performance our QX context revenue the In The biotech. as runoff to resulting Let COVID-XX of end headwind was pharma customer expected Growth revenue performance performed with QX, led

in In industrial in delivered was high this the digits mass flat quarter. the for And good We academic grew QX, in and the microscopy delivered we the Performance healthcare diagnostics the and businesses. transplant applied, was and businesses. In market growth, our and electron single this microbiology growth in strong chromatography very was led our business than business. year our end third immunodiagnostics, revenue lower end by in government, electron spectrometry quarter. growth microscopy core In XX% quarter. market, team finally, approximately and by in diagnostics prior highlighted and

QX. strategy progress on in our We strong made growth

new products strengthening launched are with quarter pillars: our and As engine. providing businesses unparalleled high-impact a partner our their with technologies and our status further work. innovation, our was the It with our new to consists high-impact across for customers X strategy our another company. enable breakthroughs in that customers of number a reminder, innovation. Starting commercial of trusted leadership industry We great

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In Dynabeads our And cell Thermo Times Beam business, manufacturing -- the Ion launched workflow preeclampsia selected XXXX business, a imaging biologists. Scientific Bioplasma along platform, to Magazine of providing the Innovations this Time we bioproduction high-resolution week, simplified Hydro therapies. Dynabeads, our we microscopy as Detachable life-changing next-generation in with test one Fisher's Best accelerate CTS electron introduced for Inventions. cell Best earlier of Gibco And our Thermo Focused

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even We our partner to be customers. our an continue strengthen for stronger to capabilities

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larger to is bioreactors. The DynaDrive volumes previous much than offers performance better and generation scalable

and further greater kits also opening research We facility to provide to deliver produce enables clinical clients clinical to collection strengthened Ohio sample supply their This by offering our trials. customized in a for our to kits stability support chain us trials.

mission-driven expansion and our and enabled Business As our empowers customer in of navigate enables quality, in a and to and productivity PPI helping environment. always, a allegiance to our which dynamic day also proud operating every to the find efforts, of the PPI improve quarter. way strong quarter. success resulted better our it our during while culture us I'm team's System colleagues all engages us margin

is We our returning deployment shareholders. continue which strategic and capital been combination M&A active execute a of to very capital successfully It's a year. to strategy, disciplined

Site The earlier, is January. in the I performing business exceedingly we As well. mentioned Binding closed

During our therapies. of approved treatments leading the real-world evidence CorEvitas, of for acquisition quarter, a regulatory-grade we completed medical provider and

evaluate data real-world a and through The biotechnology it's a high-growth monitor are routine setting. great collection and of increasingly clinical and customers is care. effectiveness medicines looking of pharmaceutical as safety regulating evidence well business as health segment a is of post-approval This to the patient market business and outcomes is research clinical the their start. gathered to part As and and examine bodies off in the approved use our now reminder, value from as

companies Proximity proteomics. leading to The the company Olink technology, announced protein at rapidly our life Assay, level the after the acquisition agreement the proprietary academic and that to and customers the an researchers close precision biopharmaceutical is of Shortly having of is acquire profound that understanding impact we enable Extension medicine. and protein products accelerating as proteomics science disease provides Its advance the gain high-throughput Olink, continue of to research a underscores quarter, efficiently. Olink analysis.

complementary This customers. leading mass spectrometry technology to to life and platforms, technology to sciences this we're positioned our is highly bring rapidly and uniquely

operating We in and synergies million $XXX revenue year synergies efficiencies. adjusted deliver driven cost income by expect in to five,

be We into business expect well revenue a to the future. business for us mid-teens growth this

subject including to is targeted conditions, by transaction The approvals. closed mid-XXXX, to be customary regulatory closing

strengthens an Thermo has Scientific XXXX active So of Fisher for further the M&A that been future. year

populations alliance advance retain in collaboration The through underserved with During launching expectations bring the experiencing priorities. real-world meeting and representative to populations Minority collaboration continued in historically we trials reflect to not-for-profit and our clinical patients their patient education fully pharma Forum, This environmental, to condition the studied. research organization, will being for the quarter, and biotech research regulatory disease and to who help National a included clinical trials. clinical customers health a supports governance social or Quality enroll

helps Drug requirements to meet diversity U.S. also to plans. our It Administration action customers and around Food enable

efforts, XXXX. sustainability terms reduce our greenhouse officially environmental goal by XX% In by to emissions surpassed our we've gas of original

way we by goal. for way increased environment proud our greater by colleagues of on I'm a XX% and enabling a to success, the announced, work positive and very for our achieving target our As not making creating that a we've only XXXX, well a we're we're also reduction impact previously difference, by our society. but making to customer

third the QX in delivered our quarter. summarize by the and from to PPI takeaways Business strong key execution of driven our performance operating our power We team's So System.

we're and delivering macroeconomic our competitive and company, challenging environment, position taking more while performance and outlook. the managing appropriately actions on strengthening the right we're simultaneously long-term focused short-term incredibly the Given differentiated

for environment, and opportunities incremental future. leader positioned stronger exit unchanged, our this navigate customers attractive capture The an industry remains current industry sciences and help the a long-term period to we're even uniquely outlook very life with the bright

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

Stephen Williamson

Marc, good everyone. and morning, Thanks,

As deliver we outlined, our performance. Marc release press macroeconomic more challenging as you continue in environment third differentiated saw in to and became just while quarter, the the

revenue, In delivered included QX, core $XX.X growth. of we which organic billion X% revenue

System EPS, a margin adjusted Our we basis us successfully XXX points PPI to XX% We're increase the last Business to generate expansion, year. delivered current continuing of and adjusted QX navigate of environment. operating $X.XX enabled over

our now additional with as some our provide $X.XX. details adjusted we was And earnings results. mentioned, me quarter in I you Let the QX. GAAP with $X.XX of EPS in EPS on performance, delivered beginning

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

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

declining the Asia Pacific in digits, with digits. China declined in high-single the low-single

The Business us realization. and the our partially continued margin offset than strength adjusted cost respect increased year. conditions. manage enabling appropriately was With our the adjusted the PPI exceptionally achieved to last System. to was operational quarter, macro impact price good our given XX.X%, investments delivered our This lower the basis pandemic-related in reflects of strategic productivity revenue, It's by and of FX. base QX points and strong In productivity income we operating quarter XXX operating performance, X%, higher

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

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

results Looking below the at the our for line quarter.

last Our similar $XXX interest which net was year. expense is to million, QX

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

flow cash was billion free $X.X was flow investing of operations flow the balance capital expenditures. to cash Turning from $X.X sheet. $X Year-to-date Year-to-date net and after billion billion. cash

During deployed just to $XXX capital million of through the for over of capital $XXX and shareholders million the of returned quarter, we we dividends, CorEvitas. acquisition

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

Our the ratio at of adjusted X.Xx was debt leverage X.Xx quarter end on basis. a and the to debt EBITDA net gross

adjusted company. my the on that strong across ROIC investment comments concluding we're reflecting performance, was returns In XX%, total the our company generating on

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

in segment, varies a prior framing of the to rates higher execute that The with And pricing continue realization strong comments. margin of address That reported we some was year. couple segment and margins. inflation. skew does by Let revenue of and scale all the revenue me profile across segments pandemic-related our and to growth start

the the of our year Moving declined driven by Solutions. organic lower was XX% to revenue details, in and the runoff than the quarter. versus XX% prior revenue ago starting the on is pandemic-related in with year This reported quarter. segment the segment revenue predominantly segment Life QX Sciences

operating XX.X%, versus decreased margin up operating Solutions Life XX% year adjusted Sciences QX adjusted and XX was points quarter. the basis income prior for

mix. exceptionally quarter, FX, and partially the favorable unfavorable by offset which had strong was During we productivity delivered volume

we productivity and XX% partially X%. organic The in very growth FX adjusted by revenue In strong margin increased was In income was strategic business. and the and led by segment in also strong points delivered growth XXX XX.X%, adjusted quarter, pull-through, basis and increased In which operating had Analytical investments. was up this strong the operating reported quarter Instruments volume offset year-over-year. was this electron microscopy this segment, X% QX QX segment,

the Turning In to was diagnostics by revenue X% Specialty Diagnostics. led quarter. than our core QX, and see microbiology organic revenue to in growth continue lower we transplant underlying QX, reported immunodiagnostics, In increased strong and X% year prior businesses. the by was Diagnostics for adjusted income versus margin quarter QX lower increased offset basis year adjusted XXX the XX% quarter. This which revenue QX points XX.X%, Specialty in operating was ago XXXX. and higher pandemic-related than was the operating

That offset impact strategic was volume favorable COVID-XX by and very quarter, testing the lower During mix strong delivered we and productivity. investments. the partially of volume

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

services During income XX.X%, adjusted was than operating this QX, organic this higher points business. revenue adjusted growth was in operating is QX In segment basis QX, XX% and led by XXX the margin increased pharma segment, XXXX. which

quarter, During delivered is partially favorable and offset strong which exceptionally productivity the by FX. mix, we

to turn guidance. now me Let

the outlined, Marc more we're environment. full As to XXXX macroeconomic our reflect challenging year revising guidance

for of growth estimate is $XX.X revenue $XX.XX billion revised Our XXXX of and with core X% just revenue adjusted organic under EPS. of

we earnings call. versus provided with change estimate the revenue. Let now some our you guidance Starting on details me the behind provide with in last

we've guide. prior core the than which up throughout customer the in $XXX than reflect of weak our prior growth and of less by by than this seen general our driven spending factors guidance FX. conditions is revised $XXX due our CorEvitas X%, year the China rest guide acquisition change just lower see same under is of year, increased This now is the million from the We headwind little to the a X% by driven across outlook. an cautious million organic assumption. economic is lower lower increased revenue and the core million base. in for $XX the We've is that to the Our

the an assumption during our industry the during slightly year. that impact we indicated result, and core quarter, the saw continue we factors increased for as we negative conditions is year. QX will QX, now for And the our growth the market of of at to end expect throughout remainder As a these the be

expect and year organic differentiated macro growth challenging the navigate the effectively to more continue we conditions. despite for the continue However, to deliver dynamics revenue to core

over The our to now the pull-through we a and revenue be revised XX.X% of for year. guidance on on the lower just margin XX%, Moving profitability. operating to adjusted expect assumes

given We continue revised the an $X.XX lower From the manage conditions. Business market System appropriately adjusted FX to related guidance is to in the PPI to use the EPS change to our and standpoint, costs due core revenue. $X.XX

So we XXXX, deliver now macro given in a the to expect $XX.XX adjusted of strong EPS result challenging environment.

guidance. details XXXX Let provide with me of additional you some now updated the

deliver $XXX testing assume We that we'll of revenue continue in million to XXXX.

our less on growth. we'll of expect is XXXX, We recognize vaccines research an revenue therapies million over revenue billion will This organic in clinical year, the $XXX our impact the vaccine and prior be total business. $X.X X% which in core billion revenue $X.X therapies-related of assumes than of

on to FX. Moving

now our Given more headwind now we're in contribute CorEvitas performing assuming changes, to EPS, Site previous terms they'll million our a year-over-year at which of that a is to the acquisitions than The now $X.XX, be are approximately Binding the guidance. headwind rate $XXX revenue $XXX $X.XX to reported approximately year-over-year FX a and FX recent assume will that we And of growth headwind we year. revenue be for expect well, of adjusted million. and

of expect of Below net million under XXXX, CorEvitas. just increase a we slight in the expense the interest line, $XXX now acquisition reflecting

and continue flow expect We net and $X.X XX%, XXXX expecting between billion that year. $X.X and between tax And billion the now for that billion. will assume be now to will expenditures billion adjusted cash free rate we're the capital we be $X.X for be will $X.X

this January, in acquisition $X.X of committed we of in which In and already billion includes which of in $X guidance close capital to deployment, Olink, billion XXXX. our the billion completed expect completed $X.X acquisitions terms year were buybacks, to share

count a average share be shares million over to full to XXXX. approximately capital million increase diluted continue shareholders and return we'll year approximately $XXX year dividends, assume We this XXX will XX% of through that

prepared starting conclude is to thought in expect assumption XXXX X strategy, and our is to share some XXXX. X point I I good to detailed points. thoughts in that growth. more share, to a to in be declining similar XXXX market XXXX, this organic growth At my before continue market With mean remarks, X% how frame be we growth helpful growth the similar approximately our around that proven XXXX So with it will would take would to core revenue time, to

of X% terms core organic to therapies challenging In portion increase revenue is moderate in of second half. billion just and growth, to XXXX. first million are XXXX year-over-year. of pandemic-related both combination based our $XXX in a approximately revenue. of a testing more growth inorganic in be of This of and phasing on around rates, to current CorEvitas revenue under months M&A of of be revenue $XXX Olink to then expected headwind the million headwind or the revenues, is approximately $X.X expect best it's total a we'd And a XXXX. half million, and revenue assume the likely X%. to $XXX and X vaccines of That's The in FX

will So similar together, revenue XXXX all this XXXX. to be wrapping very dollars

strengthen to pandemic company inflation investments compensation incentive the us expect Business to controls the deliver costs System industry with continue the PPI to line similar are also adjusted the of remaining normalization operating appropriate across the right adjusted terms revenue, top underlying and XXXX. of productivity In enable very in and long-term our income dollars to We'll carefully, but and this in Strong offset the manage to to to to colleagues. leadership. use we to continue investments runoff continue operating expected our income setup, dollars, make would cost

increase cash interest more to would net offset Below billion rate -- benefit generation buybacks tax our the and in of XX.X%. income an the our slight impact line, $X a the from assumption of the XXXX than of in

EPS deliver year. the $XX.XX to would for of adjusted All of this around us enable

outlined, us strategy full So our and XXXX the macro with to increase conditions revenue revenue runoff System should deliver execution the can the to very deliver to adjusted XXXX proven effectively Business EPS. in to I the better we growth capabilities will and would enable and a PPI so we'd high-level is expect revenue continue enable assumptions, similar upside just than to market be improvement our the similar to growth be summary and And that these that benefit. conditions in strategy, in manage growth organic slight pandemic XXXX us profitability

guidance I on insight conditions next of the for from with for look forward usual a we'll XXXX. a our details XXXX the that the earnings ahead. call, year XXXX to providing year point, full you our entering along view At have macro supporting formal on and have better our

to positioned industry in financials remain and on leadership. to our growth really going opportunities we'll navigate really delivering strongly We additional strengthening conclusion, continue So we're forward. cost we over well, about growth well market to time. accretive environment our positioned the really as think drive capitalize And further differentiated normalizes as well base,

Now turn back Raf. call let to the me over

Rafael Tejada

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

Operator

[Operator Nephron from question Meehan Instructions] today Our from Jack first Research. comes

Jack Meehan

bigger reflection, are decision environment lower the greater you think may was investors X% prudent a Upon something long-term your picture been raise Marc, it's of to And do the X% for to than curious, term? to in? you the in have based medium that much I we of target think on think do how to question.

Marc Casper

getting right? keeps don't if thanks is the organic and Jack, that don't meaningfully I think delivered -- to growth, market. look question. X% you relative guidance faster our controversy any we're for growth, to to underlying controversy to it last or years, the there's going think growth at XX targets, growth. there's superior better better because I and Yes, XX long-term we've or grow I X% the the X% think long-term about any it X% market When market what's

not points So that's better the X X, question. than that, spread of in

the to X% X% to X%. get X%, you So to

are of are appropriate market that actually about X% historical thinking number. I When the I the The long-term to industry is this years for drivers X% health talked growth my that the unmet the bright about long-term feel you'll think care is, at the that health things the about Analyst Day, the and now bright see drivers can But my returns. what that the say that what not this exactly that what exceptionally future. remain growth, industry, change industry going And call all view can't do in needs our I the we through I growth extraordinarily return. and is for when that XX-plus is

you, So thank Jack.

Jack Meehan

follow-up, what's in try then earnings what just the as pace the the And diagnose kind kind market hearing how as see XX-year, maybe that the in increase your deterioration are kind And happening early a quarter on from here? recovery of of of customers? you even we've Like impact does seen are it? since thoughts you of the what the you or and second September, did recent

Marc Casper

Yes.

I've out with So been customers.

in and know, lot. the that quarter, and in with you there U.S., Europe I've do I our China. on earlier As tour, a was I customer been a definitely out both in out the --

about when So on are think the our customers I bullish mid- actually long to very what term. saying, they're

for So a of there's opportunities lot quite us.

say visiting term, funding customer, is would to concerns you're smaller if short is going you're improve. the environment I about what is biotech seeing when What a

with non-term robust So that's Anything long after I term rate the extremely and forward you... looking positive. being across It's excitement the there's are a caution. period. future us. interest generally base very a of the to as the level But cautious on And customers think and pandemic customer customers

Stephen Williamson

interest the wouldn't rate. think No, long-term about I

going timing between start from played of be valuation expectations successful the out, incredibly kind biotech interest and then the the think I forward. and will a I The customers, an get investment profile the the investment. are still compelling. moderate that better a funding funding think is standpoint, I will there's to but return people spread think our return as for will And flowing that going what rates of still in on

moderate will appropriately. that term long So

Operator

comes next Dan from Cowen. question TD Our from Brennan

Daniel Brennan

end Maybe just the Marc the the view this given to somewhat the Stephen, structural kind of me. just magnitude of excuse -- drivers. of Steve customer towards hard weakness attractiveness reconcile It's market and

much driver on perspective, give us this a other towards How 'XX, like like So China? maybe is could geographic a you lens from for first, just a that maybe outlook of regions?

then, biotech. just underlying R&D, of largest maybe be precommercial And that great weak b, you your of factors about it'd learn within just pharma is the very biopharma base, pointed like customer to Marc, growth some kind mentioned bioprocess,

us a the more little contracted kind on real outlook. of give growth color driving what's Just

Marc Casper

Yes.

So Dan, question. thanks for the

way basically market which of and each out by think it out we what thought December. on when to not XXXX the year did plan out an business, see finished know us on by took us finish, of Stephen geography of assumptions the went do at And how benefit and and that years all process, the we lay about I details. actually details play in that having we then based then We on I we of the XXXX giving operating early figure today we having conditions in through the based we the XX-plus view is of experience our do could today. the looking based guidance, how industry the

country, geography and by unit, not seeing. business by view on based what rather but and based on a this So experience bottoms-up by we're is

us about next I right, numbers. try incredible COVID year, clarity for you when we about So to think in give what's our

revenue a XXXX. That of million XXXX, those expecting in of we which we're is. sight line what good COVID-related revenue $XXX pretty runoff billion $X.X activity to So of of leave of would in have

effectively going on the business, business. assumption the a And second COVID-related should So meaning base excluding the in that the And X% is then assumption. that's little first growth. be what's bit over

get of testing that as that's factors, of of to those think number part remember a how you if decline. So you core one X the

of So assumptions. that's a set

seen instrument you the that So But going having it from the that some time were our to factor. next to able comparisons, growth businesses comparisons of is which of based us and more we on period benefit little caution. supply to that second half which there's about time. at year, gave points kind doesn't be And to had actually customer of of up another businesses our different XXXX more in of half, of just that then this we the to growth need And fully moderate like the back In year effect obviously on the of orders think difficult which chain get in year. that -- in bit lap this disruptions then at the first shipped, catch a looked a lens have caution, different will or business, that to XXXX. benefit repeat of we're and

to a said, a that next We factored we have all the our and all call actually out guidance year. are numbers look the earnings But be and and to forward similar with of there today we're pretty we'll articulated We is aligned lot takes wanted what in, to we because analyst January, and that what we community February there's have seeing for big early in smarter. core numbers quite it at XXXX we to puts relative detailed our our of be of when the that disconnect the today. end doing is

Daniel Brennan

give some large you and flavor is trends bioprocess, just the just key and PPD. there point thinking your what well. QX, it's 'XX you're window on Maybe your to that. give right as to spending, on us it point some vantage how follow will that about in 'XX, up a R&D follow you're just sorry customer of kind base key give about up just you little such pharma a just biggest a for what segments a to we bit And of driver. maybe biopharma Could -- how like now? look us since biopharma on of us since think customer seeing about jumping as kind QX maybe Can off Maybe

Marc Casper

your fellow I your are building throwing at tomatoes think analysts Dan, today.

XX level one. at high questions You're this asking leave I'll But in some that start a we'll of others. for and

some a Let biopharma QX bit into -- me and dynamics. of was what break the in the pharma of revenue little underlying then

question. that, in similar terms was about caution Actually, we incredibly the the Effectively, long-term X%. We customer looking how is in in at earlier talked that the declined to performed. revenue a strong. of We increased quarter And actually the outlook here an quarter bit. prior

You forward-looking That's in see see set. of you the across biotech what and pharma, more that more customer look. a pronounced

I think about in think our we we that. that bioprocessing previous guidance that way is the we the one of the our assumed quarter. that quarter would and that was orders see fourth stabilize, start do, did to most in relevant business, thing things probably not our in the We why normalize third

say QX bioproduction. about you driver really orders. talked if same we biggest didn't the see what's of versus is So normalization in factors that the We what of single

time. operates In on that roughly general, lead a XX-week business a

the QX. you if to QX, you're step in up don't orders see the in revenue going not So see

hopefully, helpful I'm terms the So questions. of in that's of I'll in the future framing. some sure other ones the get

Operator

Derik of comes De from question next from Bruin Bank Our America.

Derik De Bruin

I R&D yours. How of that like Pfizer segment, the any Marc, on staying announced typically 'XX the there. services of was biopharma number? there of big the you sort at of should in flows COVID do that you impact And PPD, how what to sort and out business just of been in sort in is overall business in sort that just some any both And so Moderna the we of through have haven't also 'XX about guess, think take-or-pays we customers with called and the past. sort business? Can vaccine are the that clarify that They can revenues have cuts.

on So that, a I'll just I know start there. that's lot but

Marc Casper

Yes.

So question. Derik, great

and have. about you talk research then level some let's answers of the question So clinical give I'll the you to one above

Business almost anniversary So terrific And PPD, great. which acquisition. a of at future. a of the X-year doing in we bright a been with XXXX. is It are acquisition closed terrific it's acquisition December of is early the

industry. moment of think time the clinical phenomenally in in it part set vaccines had business of December PPD the respected was capabilities, the business just we the XXXX, its you therapies, a and great how in is was and of of sort reason how of supporting relevant and trials job in done great for role which played a what growing the knew leading about was If core normal

this organic modeled through actually would ownership on been be core ownership, we've declining all of business. our growth. portion of that Since the a in a It's our headwind

was think growth it. if we So actually But organic and our was been it it business's really through so factored than didn't higher our and we're -- has core end was to guidance. into about market if grow include going this view our I good just

customer in pharmaceutical rates $XXX has embedded non-COVID and business in our for through slows, of and you quite our To of going the runoff we biotech, investors and million and as therapies. the the also Obviously, in year. and be the caution $XXX is we're it but XXXX number, on that actually a million decline the was vaccines increased in what give activity our happens growth of to ensure wanted revenue therapies, that, understood in to healthy is that magnitude vaccines

that's So this year.

to those clinical sort as trials different. things, opposed are or take-or-pay of And

patients enrolled, go have you through it. You

that little of -- the gave that we in total some outlook run research. pandemic-related, work services $XXX an amount for off most all the of and of will So next In of fashion it in revenue a There's orderly testing. pharma of nominal bit over of years. take-or-pay that revenue actually of million couple in that clinical is

gives So sense the that dynamic of you hopefully, a there. good

Derik De Bruin

Right.

if sort just assume the just this I just your as PPD business, of year there's of core for embedded said, of the underlying about what's for So working growth lot and variables. Just of next number we think a year? sort

I think just some clarity would help.

Marc Casper

Yes.

business of do guidance. obviously, that. by don't in even So our into get we'll some unit We it

of is acquisition terms benefit plus for said the digits single this sort you term. we've business give long-term think it. a the what and hasn't long about in changed of time at the can I how high but we've growth -- What direction So the of the that synergies. consistently said And to expectation is of

that to has the that, back and or next the it would runoff sort bounce on down just then step of activity down assumption growth year of and step from up double-digit the math the actually Our XX% so. that COVID below over will it been then and

to of helps about it. in terms think that how modeling hopefully, So

Operator

question next Our comes from Rachel Vatnsdal from JPMorgan.

Rachel Vatnsdal Olson

Great.

color So for that to XXXX. appreciate today that up wanted on follow two us you've the areas all on. But given I

First, be looking region reasonable declines? you going next be at going playing XXXX? out the point, year? this in we China how to growth do in to see is Are At

story And more really be then going also given a market half-weighted to dynamics. that you've those noted XXXX is of back

through that the expected walk be market? comps much the driven you to that between magnitude an back first half could expecting versus in us easier the of step-up of half? really rebound So And is you're in the the half by how and second going

Marc Casper

thanks. So Rachel,

for think Let understand our on view it's China. relevant going I to me with community the start really And China. in what's on

of first a it came to with I away encouraged -- more all, which So in return did in was term. I the long on And to actually China, great August. way

me detail give it. bit you let more So a on little

customers then And China the with hats. opportunity normal interact and and visit One Business had Thermo U.S. also sites during colleagues, of of of I lot had Chair went the to the to that CEO being to of is my opportunity process. thing see our see the I with did Premier. the senior two including I government, Scientific China Council, different of Fisher the members a Chinese where

I this is came my from away So with visit. what

create the conditions are quarter. and business that We is and working boost The a saw environment during worsening foreign challenged is stronger investment. the confidence to actively government worsening. Economy definitely for

I better about focus companies, term, think challenged was that which environment surprised the the for a pleasantly on macro of kind a picture, bodes well a real macro short when I definitely the from foreign for So future. economy.

exactly about saw do. the get in will we the outlook we comparables results, and as think that comparables. market impact declining economy But definitely predict stuff, and all for that of challenging year the we for When would second to we the of and the know beginning the continue can't the think expect I that, half will more that the for when here, we in I that the When phasing look the China XXXX. the in about of forward easier lap we doing comparisons some of

Stephen Williamson

more kind second half. remarks, and of as is modest But kind in what a up challenging the of starting a in growth then I mirror in Yes. this put year of image first of point, I half Rachel, set the kind prepared the

Rachel Vatnsdal Olson

just could squeeze I spot then at growth. That if in this quarter one on more a X% And Great. was instrumentation. great

You've some to noted there. that the weakness and instrumentation in you've you're also incremental of over-indexed highlighted China,

instrument world? you're these next can then What what difficult you in comps face think walk how of given you're in was versus exactly that And instrumentation year the just of growth through China seeing that in X going should So portfolio? us some for rest quarters? first we about to setup

Marc Casper

growth. in pretty a good job. So Team I'll high doing a quarter at probably X% Awesome instruments, it level. keep analytical is

Our launched great mass which uptake our is electron see And breakthrough we June. well. microscopy the in business, really performing spectrometer, to Astral, extremely on which

So those are the highlights.

framing non-repeat -- our this the year the the through of chain. supply Our working guidance of some for next year and caution reflects for customer of the and pandemic disruptions on the

for the year. in the embedded that's outlook So

Stephen Williamson

in of of we terms lag in more came revenue just in in profile saw in bookings kind instrumentation a because kind on through to terms the QX, And of revenue then QX of an some that of the QX, be in China additional weakness for of Rachel, it's in but going business.

change of that that So the saw dynamic by why in China. profile impacted of more part QX that's is we

Operator

next Partners. Our Souda Instructions] [Operator Leerink question from from Puneet comes

Puneet Souda

two of questions into I'll my one. wrap

largely on M&A. First,

of seeing that Binding doing, the M&A? you of should there? Given in environment type the prior sense type us seeing are that you're now, the doing that what of opportunity Olink, of base the CorEvitas. right could Site of that and type expect you Is valuations you're to we the midsized to continue and sort deals here give you're at, just deals Obviously, that maybe out a

not successful despite Orbitrap year proteomics maybe a And this at within Olink. combining next better of franchise, a last market for your, or being of a with lack of that the with and XX-plus could franchise us years, sort Marc, on year? provide high vision proteomics now you tough level, work

Marc Casper

Yes.

question. Puneet, thanks the for So

you of in so customers, and opportunities it's about the favor. I year look in are what returns criteria general, or shareholders. different highly to And be we periods M&A for valued you to our generate when time M&A in position, is this And the it think that's your use even the skew different about going by M&A strengthen strategic our where think at our strong for going that

phenomenal add really terms good able year, to of we've a profiles. And in with with this company volatile growth businesses the X return incredible macro, prospects, been more strengthening

in next to that like exactly different those fantastic. different mean and Olink, buy doesn't where that of this more balance will it. can year you to Binding be years CorEvitas a or of So the this revenue look it's But Site, cost that year, really able are growth things of and and aspects get companies

had is in about given that period, And fit, of terrific which And a this being think just during phase well a business blackout when I it's about a think we that that through a gone it's opportunity it announced adopted. you our first Olink, leader has

So commercialized. the hasn't hasn't in mass globally and nearly technology potential It and But it its here position full risk to anymore. leading incredibly reached isn't proteomics. our spectrometry complementary

well, of run for bring products leader a to as exciting. we're next in field the the plus that the an XX-year plus life with and excited year are their record PCR X track are position They that and these our to in instrumentation, about really which we very others reminding terms combination for in fashion. thanks help sciences customer the relevant a in accelerated base many fact Puneet, there, Astral And leading Orbitrap, have being the and big Olink,

that returns to that that's future, And of for a synergies, that, driven just of double-digit be operating And top from income really five to mid-teens-plus revenue by generate and able come business shareholders. and generate we year be look right? growth to when long-term, adjusted we accelerated expect million earnings growth, to going $XXX the on this the the significant synergies

outstanding exciting super time, stewards capital. be shareholders' we'll of to and continue So our

Operator

Burstein Eve comes question from next from Bernstein. Our

Eve Burstein

I'd and products biopharma services love ask to lab unit. your about business

past. out than talk you when point So some right XX%. any of the drivers. margin there and the And up in operating there, and positive the takes was puts was called productivity about higher as you the It mix at

questions two just there. So

peer does margin companies a sales brought actually really have guidance mean of that that talked low One, was driver, if and some down? on products. down Other consumables general of mix, your there were in that positive challenges lab about

productivity little those bit dynamics? to is then gains. a can about those secondly, over be So and sustainable driving you recurring going are And And that? time? on What talk

Stephen Williamson

thanks the Eve, question. So, for

dynamic is more margin mix you environment I that think of the the think when profile yes, is China, -- then segment, comes And where challenging segment, caution customer in about in terms channel and lab So that in when about impacts from. other our impacts relative the where products the wider mix that also the caution so customer business. business to the business,

the we've about and of terms change. -- it's cost base productivity, given been lab the volume within rightsizing In our products business

majority the that's of wisely So good is. And business, spending but out. call where probably across those just the that to whole two then factors are the main

Operator

today from take from Leonard will Dan question last our UBS. We

Daniel Leonard

I'll XXXX. all thinking but or of I'm you're a how either keep to that your sharing for the inventory you the view, thoughts XXXX. market it's curious additional one. not bottoms-up I framing a it I in those about effect on follow-ups for appreciate business couple but know have Really Great.

it, you're in seeing high-level reasonable for burn what and XXXX? assume been channels or in there's where match customer is thoughts. demand areas inventory the it whether can you usage? bioproduction think wherever those In be down do assumption any Is burn the to concludes it down business or XXXX, reasonable a Just

Marc Casper

during enough a the revenue during And exactly bioproduction get quarter. the about smart orders Yes. -- point which back think to think don't anyone good But I story. that do some So question When year? I XXXX, I matching Daniel. at it's know is we think to will primarily

because with benefit to the on inventory the of X inventory is think But on that of year I be months our out customer throughout be don't time the in XXXX. reduction that's see I going about there. that's view that's there's think talking currently smarter another So set we'll the what consuming activity we'll

Great.

you well for of you to in look Scientific. positioned us let for always, And to bring very forward Thank new thank So for differentiated quick up year. to joining Fisher We updating continue just Thermo to performance. you as wrap We're deliver a call. today. the me your support the

Operator

very joining. for today's concludes everybody. Thank you conference, That much

day. disconnect You lines. rest great of Have your may your now a

Thermo Fisher Scientific (TMO) 25 Oct 232023 Q3 Earnings call transcript