TMO - Earnings call 4 2023 | Thermo Fisher Scientific Inc.

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Operator

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

I'd now like to introduce our moderator for the call, Mr. Rafael Tejada, Vice President of Investor Relations. Mr. your begin may you call. Tejada,

Rafael Tejada

thank Good joining for morning, and us. you

Vice is call Officer; our Senior Financial with the Marc and and Officer. me Williamson, Executive On Chief today Casper, Chief and Chairman, Stephen President President

full the note, fourth until will archived XXXX and Investors A February year our thermofisher.com, XX, on webcast News, quarter heading of of be under section XXXX. Financials. this the website available call press Investors Events is Please our in being of website, section live and under release is of the heading & the earnings copy Presentations the our

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

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

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

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

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

Marc Casper

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

ahead press As October guidance you our saw provided we in and were our in execution. release, fourth on demonstrates strong quarter of the results our call

In for to while, As I'm and competitive commercial delivered success with long-term scale time, the the operational of position. our more the customers, of full I strong me operated our our execution. demonstrating financials. speed our the on short-term I'll detail let into get as team we remarks XXXX, proud enable my differentiated at they performance discipline strengthening incredibly in but at first, recap reflect later, very same performance year, while

with quarter. Starting the

$XX.XX revenue billion. Our was

billion. another basis Our income adjusted of adjusted EPS $X.XX And X% operating was operating margin quarter We we XX.X%. to per EPS performance, delivered growing XXX adjusted adjusted expanded to $X.XX strong our share. points by

PPI cost our meaningful gain share effectively addressing navigate macroeconomic challenging billion $X.XX year base terms products, our execution, year, once adjusted was with in a income outstanding and to aggressively $XX.X revenue and including expertise. System leveraged of $XX.XX Business operating again to We our environment. in adjusted services our enable was billion our Then share. EPS Last we delivered was results, full XXXX, per industry-leading

same with capabilities time, partner our the and in further innovation, our At additional acquisitions, position with investments long-term trusted exciting and our status high-impact customers. complementary we strengthening strengthened competitive our

with market market. largely conditions Turning underlying our to the quarter, end out our performance expectations. by fourth line played In in

our performance ahead continued was that in of expectations. slightly revenue resulted Our execution strong

pharma on and context performance biotech. markets, some let me starting with each the Now of provide of you end our color in

X-point runoff that's customer high the In resulted transitioning for in COVID-related declined in the very offset X% our approximately exciting quarter partner growth strong therapies, in this and and single expected, trusted digits headwind a of gains vaccine status. XXXX, for future. progress year. to the effectively We've which made segment, the and through a therapy result for As full in was other share as capacity

mid-single quarter we the mass delivered in businesses, microscopy, a year. range electron and government, safety as strong grew academic full research spectrometry the XXXX, and growth digits of as digits in In across In our we for the and for chromatography market including channel. high the and well single

industrial In year. and grew and we digits in the the the single low both for full applied, quarter for

growth During the year, we our business. electron delivered in very strong microscopy

lower finally, for revenue XXXX, our immunodiagnostics, delivered business diagnostics diagnostics in transplant declined growth year. high In microbiology and was in QX, health care, in in we good the highlighted end and and And core the teens businesses. by full this market, XX%

update turn to growth strategy. our on an now I'll

pillars: reminder, our our status a with unparalleled As commercial partner trusted high-impact strategy engine. and X our consists innovation; of customers;

first innovation. It leadership year, the businesses of another customers Starting across that new we industry pillar. their work. terrific to high-impact outstanding advance launched year the our Throughout our by was products our with important enabling strengthen

the the of Astral and Scientific previously the of enabling new has product exceeded helping the customers spectrometry, chromatography enter biomarkers. community's months Orbitrap In our high scientific to proteins yield build as is including In we is highlighted which clinical Spectrometer, The XXXX. momentum X identification continuing and groundbreaking adoption by medicine, precision uncover advance that was were mass is expectations, to Mass the customers of since the undetectable. launch, the our breakthrough Thermo launch scientific the

launched to Scientific complex increasingly development. system we automated STEM, to semiconductors X large-volume, microscopy, data Metrios obtain fully electron rapidly the from a our advance In enables high-quality that Thermo customers

it raised for women, adoption for this we care clinical physicians care for Diagnostics, better who to most is of has assays risk pregnant at the attention the has and standard This FDA-cleared Specialty of helping risk In management manage assessment preeclampsia. first predicting the and diagnostic significant condition. significantly first-of-a-kind by launched as received

Gibco our manufacturing of Life In we CTS life-changing Dynabeads Sciences introduced the to Solution, platform, accelerate cell next-generation Dynabeads, therapies. Detachable

logic we Purification Thermo System localization Aquanex reliable And great microscopy, Scientific we the precise in quarter. advanced and semiconductors. Ultrapure Meridian electron operational Laboratory the for this water in Water in launched Products, continued for the We momentum System Scientific fourth innovation In purity Thermo enhancement in EX defect laboratories. launched

future. So and pipeline of year the another exciting spectacular for innovation an

engine continued customers. our strengthen customer Milan industry-leading and trusted included also have commercial and our excellence status industry-leading we to with we to center partner state-of-the-art showcase a This of services product XXXX, In of expertise. the in our opening earned the

And in during of of the energy Experience generation fourth the quarter, we Customer development opening further position to strengthened materials our by manufacturing advanced accelerate friendly next for environmentally solutions. our battery in Center Seoul

companion lung in advancements in partnerships great where longstanding the cell significant Building and a collaborations Japan with example an throughout our the Ingelheim, the made was patients of cancer exciting death. non-small cancer opportunity quarter our and States, diagnostic to United also develop a a We in with fourth Boehringer cancer on testing-based year. is lung customers for the cause genomic leading relationship

of all Now Business We're PPI our during to leveraged empowers effectiveness engages higher our to customer quality, execution PPI last share our me allegiance. the helping and to base to optimizing to successful managing and improve better the part to experience. System also navigate customer agile productivity our let sourcing. generative leveraging intensity, driving commercial the It's System as find Business way our team in commercial productivity, and PPI and of an increase toolkit us I'm our turn enable our cost day. improve a way gain, AI the step year. to colleagues actively year, culture, further dynamic and mission-driven environment PPI continue up of drive way optimize which every proud

A quick wrap deployment -- last on year. capital recap

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

protein our disorders. business and by In patients gone The Binding terms the integration immune business, our advancing and we enhances deal performing Diagnostics completed multiple myeloma and of has our M&A, Site, smoothly, Specialty of diagnosis management diagnostics of ahead of acquisition and extremely which tracking the well other the is The offering with model.

of community the of represents the future and instrument methods. the a to Freelite is sensitivity, diagnostics solution diagnosing the given protein to use breakthrough impact myeloma their great on EXENT our of launch strong complement medical to conventional ease look This compared assays patients. we multiple specificity from due enhanced interest business, significant its and positive to a when our As

added therapies. great a start and approved are into we of for business, quarter, customers these CorEvitas, leading very to a evidence of and research real-world third additional is and clinical benefit our the integrated regulatory-grade, well. off the seeing now medicines CorEvitas is In capabilities. performing provider business The

the fourth protein efficiently. the to level we quarter, to at and of Olink, understanding help that a provider During announced acquire solutions rapidly our advanced disease of gain an intent researchers proteomic

approvals. mid-XXXX, As a transaction we're customers. be and uniquely completed life our is closing spectrometry to subject to this complements and customary reminder, Olink's bring The to science by leading regulatory technology positioned including platforms, additions, to rapidly track mass on technology

$X.X and returned capital stock dividends. also we XXXX, In of through shareholders to buybacks billion

our you a now social corporate responsibility on me initiatives. Let give update brief

we a better mission-driven our customers. by enabling As help company, important place a make world to the work the of

also impact supporting our in XXXX planet, a regard. a being and good We steward and of have took of our in positive actions I'm communities this the we proud by

us Building globally initiatives, This power will to transition on the of our -- and XX% recently accelerate XXXX. renewable solar with renewable world. continue around utilizing help energy agreements achieve electricity our the purchase sustainability progress environmental we to target established by our on-site projects

Nigeria, for improve the partnership To fourth announced to HOPE advance in treatment quarter, HIV and in the equity young global HIV the largest country living second with epidemic outcomes we with a people Project health with well-being the worldwide.

just we the for Fortune's again Companies To a as industry of list once colleagues recognitions, inclusive Most well Admired our list can Most leadership were a the Innovative as mission-driven was again inaugural Fisher World's and recognized Thermo Companies. Fortune's Throughout of included of few the have on year, where list once Scientific career. culture,

of one Newsweek named us Responsible as Most Companies. America's

us included as for Companies of and Forbes us one Best Top Employers its for the of Women named World's Veterans. on the list

a and about year, what I'm reflect company. of our proud environment, continues very team bright successfully beyond. the I we navigated the to incredible excited build on our for As Thanks I'm to colleagues, XXXX accomplished. very future our

success and me Stephen let We're guidance. of and an $XX billion cover the me our outlook a the XXXX reflects the us will continuation $XX.X highlights. billion assumptions adjusted This outline of execution that quickly discipline customers. So guidance, now range per guidance but a strong to and let commercial to -- $XX.XX range range of our share. incredibly XXXX demonstrating $XX.X initiating enabling of turn into factor revenue and revenue earnings EPS operational to guidance

what's there's connect the the understand and opportunity to customers as customers. on with relationships, we the with for many disease, because have progress to success. They these are conversations, Based customers advances customers in also value January clear me executive their that the access pipelines material enthusiasm essential our important our our senior I've our of to great in teams of enabling to partnership us for science future on those it's and of their From to in to terrific minds. enthusiastic see had made longstanding our the treat fields.

of long-term continue capabilities our enable All will this healthier, create well customers incredibly and demand customer make world as we scientific to our enable to safer. breakthroughs, to the be and cleaner positioned we strong for

summarize takeaways So key to our XXXX. for

Our proven continues share to gain. significant growth drive strategy

us the We deliver the elevate differentiated environment. trusted for short-term partner PPI well further combination long-term strengthen position. year. And the XXXX System, again our performance macroeconomic to differentiated deepen and our once a many and Business deliver relationship competitive challenging full with customers with continue to in We're this, power to helping our in effectively year, of positioned quarter last navigate performance status the and

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

Stephen Williamson

Thanks, everyone. morning, good Marc, and

we great you the played As saw quarter. conditions in Market more largely QX. release, our through core well execution, really revenue prior executed out in growth as we our than press guide. X% delivered we'd And expected in organic

additional of offsetting we In the operational and prior EPS, strong really $X.XX, our quarter. included of guide FX headwind that terms by execution through in adjusted beat $X.XX

flow, We also free very $X the delivering with year capped billion strong off XXXX. cash in

year, effectively. environment we very navigated the macro the changing Throughout

continuing our and our for System enabled and business serving as strategic us deliver advance experience strategy all the customers Business for invest while differentiated proven our the in in to differentiated PPI science. financial Our position a world shareholders, leader growth results to and

with and for full GAAP beginning adjusted now the full me We performance, delivered $X.XX $X.XX in $XX.XX in earnings of provide additional our and EPS results. the for Let you some year. on quarter was the year. $XX.XX details EPS QX our

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

X%. decreased revenue QX organic core

and million X%, billion In organic organic $X.X core revenue. For reported year we growth year $XXX delivered the billion and revenue X%. pandemic-related therapies of the revenue, $X.XX of testing full was vaccines of and XXXX, decreased and revenue for XXXX,

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

Asia China Pacific digits, the with grew single in digits. declining low mid-single

year, full declining declined Pacific low And low digits. Europe America digits. high with high single the Asia single China single For declined digit. North declined digits, single

and and by investments With respect to quarter. deliver In QX points we $X.XX was XX.X%, delivered operational XXX was realization. the revenue, performance, And billion strategic productivity pandemic-related continued income offset quarter, margin basis operating the good achieved higher adjusted FX. strong partially adjusted lower we our operating last of price This than in exceptionally year. to

our impact of base The macro conditions. cost System. the appropriately strength the given productivity us Business manage our of our It's PPI enabling reflects to

income For year, guide. our the operating adjusted in was prior with and decreased operating line full margin XX.X%, adjusted XX%,

margin Total due operating those the higher company in adjusted The in XX.X%, last than gross as to change was adjusted year. drivers points basis at margin. the our gross QX margin same XX of quarter came in

the gross full year, margin For adjusted XX.X%. was

points details the of on of revenue, XX an Moving of in to quarter over the XX.X% SG&A basis P&L. the improvement year. last QX Adjusted was

XX an expense year, XXXX. SG&A QX. full the to XX.X% For points improvement adjusted $XXX R&D of compared million was in revenue, of was Total basis

innovation. R&D R&D percent a in ongoing in expense our For revenue of manufacturing as our was the investments X.X% $X.XX year, high-impact reflecting billion, full XXXX. was

the line. at below results Looking our

million increase $XXX of Our interest was expense for is $XX million QX $XX expense full million, Net $XX which XXXX. QX net was interest million, lower year-over-year. year than an the

in the million, QX income other expense than Adjusted of FX. $X $XX million primarily net is expense changes higher due This and nonoperating was quarter a XXXX. in to

income other For in million compared full to the XXXX. million adjusted net year, of expense $XX was a a and income net expense $XX of

Our rate lower points the adjusted tax reflecting XX%. XXX points basis year and than our last lower This QX full the quarter in the planning for was year, XXX results tax the of for and activities. was year basis full

were year-over-year, $X shares options. million Average the approximately XXX lower net QX, in share we repurchased diluted billion by in of of XXXX, million driven shortly And after repurchases shares. year-end X January

$X.X through the $XXX was flow $X I and of flow was Full free to after cash $X.X sheet. cash year expenditures. full in million as for earlier, net QX to Turning billion cash year. investing million billion flow operations balance mentioned and shareholders from capital billion. $XXX dividends And the of returned We capital

year, to on billion which committed we by mid-XXXX. Olink, acquisition the $X.X billion $X.X completed we close acquisitions of to invested the During and expect

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

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

we're generating investment strong comments our my XX%, Concluding ROIC performance. the on across the that company on reflecting was total return Adjusted company.

on performance business of our color some provide segments. now X I'll the

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

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

XXXX. XX% XX%, Science year, than prior lower and income Life operating decreased adjusted adjusted year up the QX Solutions for full versus revenue organic was was XX.X%, and margin points reported operating XXX the For basis quarter.

with base exceptionally strong During partially has an which the job volume the the The managing of we and offset delivered pull-through. cost team by appropriately dealing quarter, of pandemic. productivity, done was unwind excellent the unfavorable

income XX.X%. margin For and operating XX%, the year, adjusted operating declined adjusted was full

strong Analytical the business. growth in this led Instruments and X%. electron organic X% by growth the The quarter was the segment in reported also increased In segment, microscopy revenue QX, was

reported For we operating up were was adjusted the higher pull-through, year-over-year. points margin year, segment, than FX basis full adjusted XX.X%, is organic offset by this delivered both strong income operating and strategic quarter, partially revenue QX XX% increased XX%, the In In XXX and productivity volume and XXXX. which investments. and

of XX.X%, XX%, was XXX adjusted increase points For and the adjusted increased operating the basis an versus year, margin prior full income year. operating

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

X%, QX down For Specialty operating year, margin the Diagnostics adjusted XXX and XX.X%, the of and basis XXXX. reported than higher full increased organic was which revenue operating points revenue declined XX%. quarter, QX is XX% adjusted was income in for

favorable mix, by impact we productivity QX, the COVID-XX testing the In delivered business lower was partially -- volume and strong and strategic offset lower of which investments.

XXX full the XX% higher operating XXXX. adjusted and was than XX.X%, operating income For increase XXXX, points adjusted year, margin basis versus an of was

year organic Biopharma Services of been X% phasing and revenue had vaccines in was runoff reported decreased and and within quarter. Pharma lower Services This the segment, the Products Laboratory the in X% revenue revenue expected. business the by Finally, as QX driven XXXX, revenue and therapies of was prior our than

points basis QX is XXXX. year, this X%, operating full which For lower than XXXX. revenue margin adjusted and segment, was operating declined both X% than higher In income were the XX%, XX reported QX and adjusted organic

mix. offset strong delivered is which we more quarter, by the volume than productivity, unfavorable In

year, XX.X%, and operating full XX% basis margin prior For higher than points increase of versus an operating adjusted adjusted was was XXXX. year, XXX the income the

Let adjusted $XX.X turn we're revenue and guidance guidance. me of XXXX range outlined, to guidance And EPS to range of as billion a $XX.XX now Marc $XX. initiating billion $XX.X to

growth core Our revenue the guidance in XXXX. range positive assumes of for X% organic X% to minus

initial from on We're in the that declines conditions XXXX market expected year. low call. market not significantly year digits on in our this framing view assuming shared changed the single the earnings last Our the has the for

to and growth once execution this enable Our to year. strategy System share again Business us take will PPI continue

to In revenue testing to of million year-over-year Our just current revenue and in billion $X.X a therapies represents this total, under pandemic-related revenue. vaccines estimate headwind million of is X% related XXXX of million of $XXX and of $XXX or $X.X $XXX revenue. billion

M&A is year-over-year, $XXX inorganic the X in of months portion XXXX. revenue and expected million to increase revenue revenue of by the CorEvitas of combination Olink

At to FX QX year-over-year to and headwind is an a a current expect be be standpoint, phasing From rates, in the and both neutral tailwind EPS. slight half. offsetting revenue we FX to adjusted expected second in

margins. to Turning

XX.X% between Our guidance adjusted XXXX margins operating assumes XX.X%. and range income

base, outlook. We continue margin manage aggressively reflected to and our this cost in that's

the range of that's In margins, range terms the that the I for driven provided. revenue by

the the continue our us inflation enable the colleagues. to carryover a long-term actions controls, offset to company expected the Business last and the continue underlying of not in largely revenue the PPI are runoff appropriately in investments System place very manage in cost further across to but only right use put year, to benefit to invest including from We'll compensation leadership. cost productivity normalization remaining incentive pandemic-related the Strong carefully, costs and also make to our to industry advance

of interests. million expect We XXXX. that the be will to we and adjusted should income net approximately other in X. factor tax elimination to below XX.X% assume in and rate $XX XXXX line, tax And related minority in of adjusted close profit expense expense to $XXX you interest the Below net income line, million expect

and between assuming capital and XXXX, is free range of $X.X billion we're for expecting the billion billion We're expenditures $X.X net cash and flow $X.X $X in year. the billion in of

close were our will count estimate And completed share the mentioned guidance In we average year be dividends, to billion assuming approximately midyear. through we'll in January. approximately already of which, assuming I acquisition shareholders of capital we're this million by share as full of XXX the return terms deployment, diluted and of buybacks, capital that year Olink shares. earlier, $X million We're we that $XXX assumes

there the few And wanted finally, touch as things year on a to phasing quarterly to for are consider. I

then be during in organic that to revenue X growth First, sequentially QX to during to points organic Implied And better growth second improve in is the expect leading also similar quarter core year. QX half growth core we revenue is in 'XX. quarter in to of than each by expected growth, terms the of organic improve year. revenue the the year, to 'XX each QX QX moderate X and

approximately increase From we share the the and a of margin throughout be year And just quarter earnings XX% standpoint, we that level. expect XX% each QX to per QX adjusted from full to year. under expect be

conclusion, in performance in environment customers shareholders. we stepped We and for successfully. navigated So our for our financial up challenging very delivered XXXX the differentiated

the to forward continue year go We you look agility, manage progress we I and we're really the ahead. our through company the for positioned on to well as year. with updating

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

Rafael Tejada

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

Operator

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

Jack Meehan

Could you just that revenue see you parts the less if recovery. look of to if that the look talk think some earnings? mean and the you question at business, what or above grow can more you think is and terms about market you -- so in start Marc, what I business at could

Marc Casper

Yes.

really year differentiated and actually short-term share was terms means Jack, delivering strengthen terms delivering performance, a long done, So of when the first of term heard preannounced had that so company obviously, opportunity in which us performance. how And of above-market we and broad-based the X strong in growth, say gain gain, right? looked look last for at, we months those to we I the at year, And that simultaneously, the of others kind or reported far. companies about for the have had you've think share

implying businesses very did very services. in of conditions. I'm And a the the These not look relative some, well. absence strong; strong at anything market This like is things Instruments, by clinical set a research, challenged year to pharma others. of Analytical You

continue it's to to for same think those positioned we're going as that what with digits comps in pretty XXXX is and our to slightly full assuming similar to I pretty made we up this year, for we in said lap is gain the back We level. be to we low down and the share momentum. As the the meaning mirror much businesses an the year, future, a and assumption than that that late market single image, well October, we're that unfolds being the in year as start wind us performing better which

So I'm any of high differentiated on And standard to to excited like. good what market certainly ourselves performance. the hold to in what unfolds we're very the about year a and capitalize going looks our position improvements and deliver

Jack Meehan

can Okay. the And talk about new example transitioning therapies. So about? businesses are there think capacity, as you you specific in an script, I talked

bioprocessing about Patheon expect for of some can potential -- a phasing business? you how what talk you and in and the So -- recovery,

Marc Casper

Yes.

about company. is how year, and outcomes about perform. we're with the I we manage is as way that comps year the in as aggregate think on that us I as and of improve the businesses terms slightly the would for demand for our unfolds, the based conditions that we for the they think industry that half expecting I range market how business the helps the of of when basically lapping second believe in the So year the well each of use a

Jack. So thank you,

Operator

the today comes from of Arias question line next from Dan The Stifel.

Daniel Arias

lot And destocking bioprocess us between where the a discussion consumables. Can taking that's on a routine of some specifically you add inventory more just distinction with the the you Marc, maybe draw down for across obviously, side place industry. work are to think versus color that on you process? maybe

keep split a similar or of happening a you If you pace it of and we kind in at Or time? are those X ending similar think think that separately should differently? do drawdowns buckets them the way, of sort

Marc Casper

Yes.

of the I with step above guess, of which essence I'll bioproduction, is So Dan, then start me I the sort that. let and question, one think maybe level

Historically, incredibly In good it's terms it an market. bioproduction, incredibly of an good market. is long-term been

name volatility in a it in during of certainly terms taboo of bioproduction, Sort of XXXX a days, right, lot these the caused industry.

a XX% bioprocessing and us, a of facts, with revenue, we products incredible under our have couple best-in-class footprint. of It's global For little bit right? an

share fourth increasingly see We positions pickup and in cell the business QX. culture sequential still activity QX there. When quarter, media, underlying is I in our the we in think But have position orders right, we about did important a purification the as in market. grow leading single-use technologies versus muted,

we We we fourth the weren't in one, see inflection. didn't and one see So didn't an expecting quarter.

that going get as it year, I've Our of moment the view normalize when an in is unfolds. inflection will year the investor calling the rewarded no And is as earlier conference in said that one for to happens.

pipeline, clinical many, about mind. coming their the our bring the think here well think very for well part are that helping have we're positioned, with for the the our year, exciting the our will incredibly We're their midterm strong. When of whatever outlook about for customers terms the in So we we're trusted I understand many to things Services, We on business, if it channel and research, the right, navigate environment helping general in into bioproduction, for breakthroughs what's that positioned. And part decision-makers. long-term I is. it's the them the play in of incredibly Pharma are earned think of businesses out very during status our room partner We're of year, I over years. the course is with fundamentals the customers

So month segment, year first were M&A of that the new seeing They're the ] companies, companies new capital many, about gets of excited many what interactions maybe end call I hopefully, love comment the they the that's much mean smaller capital. of investors that the then company that dependent I'll takeaways biopharmaceutical the the was in the customer the and more that shoots. helpful. And I They from right? I biotech, formation, as at year positive, last green [ community, would rounds biotech the of market had the that in activity make my by it, is one in was happening

certainly what it in tone while I that view. I've bodes very terms And take years. that of in few it's the for early some and seen will -- coming quarters it's was their the on last optimistic And X you. the well the time, Thank think the most on

Daniel Arias

Okay. there. a follow-up curious backlog just still a the just consistently on growth That's in AI piece, carrying encouraging. you're solid if microscopy. Maybe I'm

year? we you can and about we extended might be get this times you to stable talk today? are little can maybe move relative lead as you a do And Is through Or conversion the where just year? order the maybe bit that those think assumption

Marc Casper

Yes.

when of year, for it's think X across double-digit the businesses. growth It was business I with our a Analytical year. awesome. So all full tremendous about Really, Instruments performance the

The into half beginning of that the we backlog 'XX. first the largely things cleared XXXX, in those carried of

normal normal So at that we're times for already. about X of really times, terms been months lead shipping at -- in now we've

the year. So we're positioned on the for spot. kind chain, the unwind And of won't is impacts of of in supply the a a business the be normal good repeat there pandemic while

mass sciences demand incredible it's or for for there's spec. the material in technologies. microscopy, high life semiconductor, breakthrough in the just electron for science, right, astral, demand chroma those a and And technologies, whether It's

of that So for the the and upcoming future excited we're year business.

Operator

De America. The today from of of the comes Derik next question Bank line from Bruin

Derik De Bruin

X% your like initial I were it's just now in talking looking I'm you correctly, It when curious. core of were at worse or sort X%. about heard for of framework anything. QX Marc, If you plus lot XXXX. minus got a Last quarter, So seem growth sort didn't you

tough on conservative now what's these Are more just of this comps? sort the -- more you I'm embedded just what and So outlook? what's curious, conservative and changed? sort PPD in of more you -- conservative on businesses? Are

Marc Casper

you... don't why Stephen,

Stephen Williamson

some -- the Yes. context It's let kind hopefully on then me back guidance, -- of provide on step and frame your and question. help that

our So framing detailed on last our our out have an 'XX we early had and played and provided how QX on with we planning insight the completed businesses. for call, work

of FX, on our It not initial that but income, framing. is guidance latest margins not mix the currency. different expected by rates outlook reduces changed operating initial no XX impact that from view increased cost we provided. initial from both the and The and points revenue has Through process, view market which includes by significantly our the framing, basis on significantly. our framing from on revenue that That

note in I only fee in GLP-X expecting fill sterile standpoint, would past vaccine support. COVID have business. operational months We a that's capacity our the item think 'XX. an is from discrete finish item Services of to some upfront support the of transitioning then been X to changed recognize an QX from We're Pharma in And our

expect to we line production, the accounting that 'XX. benefit that is recognize actually starts with Now in in which finalized,

other out provide some So one it on of it and then shifted thought on best to of $X.XX QX a the 'XX, not in terms a estimate. growth. And approximately that's comment range, reported -- is core we impact the had that point guidance

the how capture I it play but for So the can of for helpful outcomes it's year, possible does reasonably see we of the scenarios range for encapsulate out year, think the investors. the now, range more as scenario it our today. likely doesn't every year the And

of of EPS, and But is kind range about the adjusted the appropriate is tees $X.X framing for kind I think revenue up of given the which of of the company. it the guide. $X.XX And scale hopefully, billion

Derik De Bruin

expansion And all should margins, looking mean, little -- margins I'm sort progress a of in in mean, we of may just across really sort progress I you've think the of seem through? we bit seen I and as of it how about good good LSS, your them. margins a segment Okay. more, go

back and just the that -- thinking I'm to I'm the of where XX% out full year? the on in of fall how figure given that is about think hit trying But just Does you that for is sort were margin that what next year, range LPS is were. we're where relative saying about we our margin sort given expectations should sustainable? -- to

Stephen Williamson

for profile and the segments, everyone the lab margin between the full the for some of margin the our profile versus within I And the in the we of terms products the think where year for don't think exactly revenue biopharma we -- at of finished company. phasing services. changes -- I of QX In to terms our year quite for guided understood

expectations. margins then as the some difference is, little about today, from this expected. And is for played to on have see forward some segments of the we point the profile think, But what starting bit margins point going ahead. we'd a think I So think the when I'm -- probably that our think I pre-call terms going notes, a year where expectations margin out forward, significant profile calling year. And there's the for in in not good -- into of different I next from I internally, for landing are margin we a on QX

Operator

question comes Schenkel Wolfe of from Doug from line today next The the Research.

Douglas Schenkel

my want to is follow-up just a a then clarification I LPS. with just really on So question, and high-level start LRP

you've been about the is to as term. long X% in said, Analyst to So Day. changed. did saying Thermo X% hasn't consistent points the Marc, last that on the points peer X over better growth to X built grow year's the X to than That talk you recently LRP, sure as X group I'm

the the as calendar of fantastic that period. leaning you've the flip is to waste. high, growth as and below in good we a line, as look to operations bit kind to fair maybe job, we top normalized an X% more adjust to crisis go a a X% say it calendar, give flip opportunity just maybe want But just little I the a to rate let a environment? that in even done challenging you Never more always, ahead. And is

that suggests you surface, be investing guidance in may least at to Your near me, the more on the term.

you flow-through normal, as some we just as incremental I'm think margin outsized get a the we if for think wondering about could to business the But business normalizes. return

LPS and quick there, I'll it then leave me a ask let in follow-up a So second. on

Marc Casper

Sure.

So question. thanks the Doug, for

X position -- market use points, share, is wanted simplicity. the for points In we of we've of moment, I X been in extraordinary And remember faster delivering investors growing moment what was were long outlook the very -- X right? And kind long-term a right, that give an the can't our X hold our We what X, raised been years. long-range XXXX. our gain growing is view think but that market, terms and we outlook, terms what do really for ability And is to share a what right? we exactly a was, that we've XX%, growing to I of we And were organic while than of at in -- while. in the our at -- for rate. standard we that what for to, is late market ourselves and many, the many, many in

so And nothing there. has changed

to industry look that to business points the what's capability future X% underlying was pharma to the drivers X% faster In term we're the there. When long a had terms when X% grow, well we this industry, going going X% right, is as a biotech than in on so of and higher our said positioned I market to growth that X%. about we said And we where market I simplicity, to our than change just market that that incredibly growth, X% to was the it, feel larger the and built growth, and X%. and was our confident be the we was extraordinary of X actually exposure think in that, I X% for to to

long-term to I component. get the delivered I I least our the But interesting low you're very basically question the a reflects single on continue diagnostics the growth probably health gain declining growth. had look industry. I've a view confident X% services, lot, you're if and on in long-term And science and saying, the to you're that's a tools, X% share really obviously when last if market in period long at way And some you're bearish tools, through industry to where on we life growth. So future, at investors digits XXXX, services, core pharma probably bullish with remain science pharma while diagnostics, went year a the of logic in X%. the discussions and from life at X% X%

bearish get we GDP-plus-type on to have long -- business you serve. markets we be term are X% in for growth the to this actually that in But to the less really terms of than because our industry incredibly segment a world the

sense you the appreciate gives that we hopefully, confident at of offer position. the a of future I And to least outlook, be industry more about our while our So and couldn't I our think in how competitive change it.

year going flow-through on volumes In compensation very for high-level our reset the colleagues is of the margins. for I And normalized of concept, grow see of line, normalized with levels you'll a incentive a back the below strong our that. as you the rate, at do the we see below to terms after what's part a year on margins believe that this very

part of that you numbers, than math have So the of that have. don't easier embedded one headwind of as see we in why just would you But expected the to level step-up nothing much in different the some margin October. that's expect

Douglas Schenkel

guess, day. for a a defense historically other In part while have has question period Thermo is to you I'm things. the -- my reset leave played you're to got pay you got played of the question Okay. to margins, going certain people, on offense, extent. where this the obviously, as where LPS not growing was, much, others to But another Marc, I'll I

and you're normalized a several over early could forward year, So investment pulling next in better-than-expected period. as to lead margin that I'm some more quarters the actually just even flow-through wondering to the if company the returns

Stephen Williamson

across continuing in will to forward. drive innovation we've think paid customer. going for production fee we're I Yes. we're accretive substantial the costs up interim great to on which example. And that. long-term here invest And good to facility that create Doug, do to GLP-X gave the is contract the get in over basically drive we're standing getting a I recognize fee not in and growth example That's the our that good a We're volumes, one really the We 'XX, lessened company. incurring a growth.

appropriately articulated. and top stays managing actually putting top as sure environment, but and we're -- that, sure that the as right environment we're cost, place our in that to good line our So investments make line as stays -- the outlook we we're much making as

Operator

from from the of ISI. next The comes Evercore Vijay today line Kumar question

Vijay Kumar

guide. the here, is annual midpoint. headwinds, at the vaccine Marc, I the one, X But first points. a guidance pretty look flattish core That's about the excluding it's at solid when My

that fiscal tech, the in tech. and PPD And that what about us remind and you business 'XX? is X X%, CRO come analytical have guide is The things analytical the below China, X%? is China, X did up pieces, X%, Can CRO at China, those what assuming just

Marc Casper

for thanks question. Vijay, the So

underlying business the fastest, for excluding activity, of in it. crushed the COVID the growth, success. The the And time, means think So undersold good just year, role when unbelievably I big by businesses, trials in doing it's were And actually at the going right? spectacular many And look way, a pandemic we I details, Like in a think performing as delivered last Really, I'll future, certainly a our about call team, and, that the as we we so been great performance we have things we Customers all challenge and this if supporting fine. roll-off, have because job much in chunk the on a acquisition. just job, think probably played well, of far was we've that transparency research same to we little the largest the the terms the in the our results. And on the substantial there's vaccines have clinical on about But year acquisition, colleagues I as to what last given of communicating. the both the clinical a love different phenomenal really is vaccine performance. performance which the generated numbers is X it's which to business. a not clinical -- year, certainly over years that's a good terms great cool. big business comparison, which a of it, of after in revenue, research,

this more it's growth really strong beyond, business, on the So we moderate long-term, into comparisons. much a that synergies year But the single-digit meaning this looking would expect be just 'XX based would and is growth future, plus driving. high the business' business, the out

but feel XXXX. I So to other challenged were market in question. clinical quick really unrelated comment is then your sort about of of element and which on research, China, China that. And just a the great conditions

this -- meaningful for really in good things. as strong, effectively. We're First then comparisons quarter year those not of calling Rather, lots a was of stimulus, the was year. so the improvement unfolds. lap we that China But China all

some know confidence at direct will point, create will know becomes it some headwind. it don't a less or or all a little government when Chinese the bit that's stimulus. does, happen. that that So of mechanism We whatever Whether of we

point, some we high. is market improve at it the do what very will the But conditions because needs for

in China Go than Thanks, on get bullish there. to time I'm ahead. Vijay. what So some currently, being long the will it been better term we've and experiencing take

Vijay Kumar

XX%. Stephen, just think operating under likely one less is one margin quick you. for On QX, I

I the outsized reset? Just understand is comp think the want impact around EPS that Is just QX cadence. from $X.XX-ish. incentive to the margin

Stephen Williamson

Yes.

kind when definitely sequentially at when in look as and think it I about QX, well. an margin element that's the year-over-year So you of

obviously, from we I the That's -- revenue think about revenue. so despite and comp. total just then basis points incentive there's the XXX the the business, the reset it pandemic dollars and lower a of when XXX of year-over-year, significant drag lower have about points So in core under contribution from basis

the cost impact of being actions year. And we've that over the the there the taken key past driver

the revenue way terms quarter the you then, of year the for profile So margin dollars as give margin the in yes, the And a grow to grows during to frame each in QX. profile the ahead. year

Operator

the from comes Tejas line from Morgan today Stanley. of question final Our Savant

Tejas Savant

commentary the opportunity. Marc, just in there, long-term of terms your followup China on a more

past outlook a the month over the in that there's company. Recently, been important so. last in being end your about or relations thawing talked for of the the market higher you for an growing You've at

side potential gain risk of services a in blowback U.S. sort you've market. the in as of that us to on think think helpful. and then legislation. the side we little footed government just of ago, long-term terms engagement. But alluded That the BIOSECURE front near in more term this got act from well you? you for a kind some while Chinese on entails an kind -- to that help be operating versus of super Can MNCs of Perhaps, I that of and be word high-level the share would through what opportunity

Marc Casper

Sure.

for the thanks So question.

China, of a part years, market helped of XX jobs capabilities and that a of of built right, long that's set created terms a been society, in over In we've Chinese it. for we that as American period time

the produce population, the of both Better it's a addressing the and U.S.-China Chinese last years China, that be pollution, long GDP for our and me industry It great term the for of and the administration over what to medicines that supply, Council one U.S. the food market, of term. is does Fisher environment being certainly long is with of does for while growing the solid the needs will government. And the air have clear we the geographies in challenged what interacting a Business couple had growth honor faster local in the helping I've good. reputation. the Thermo short-term Chair

yes, your terms that are In terms that there are countries, of agree legislation, the bills of And the happen. potential relations sentiment, I thawing. written with between there's thousands in don't a of

related for and matures an sort process, hard to my particular something companies in what what one, until opportunity quick basically working really to this implications. And is non-Chinese through federal they're of in the it's have know pass to government read position of a it it comes really the entities. on stronger So serving exact whether

U.S. be essence a the government. that. to support as So And positioned non-Chinese that's sort of we'd obviously, company, of the well

for you thank So the question.

wrap Let do on me the call. quick a just

momentum. We everyone, XXXX. a great our in position for call thanks, this So strong year participating an We're excellent entered deliver year in in to today. with

and forward you progresses. support Scientific, always, Thermo as Thanks, look As you we the year of to everyone. for your Fisher thank updating

Operator

This participation. concludes today's conference your call. Thank you for all

You disconnect. may now

Thermo Fisher Scientific (TMO) 31 Jan 242023 Q4 Earnings call transcript