Company Raises Financial Guidance for the Full Year
WALTHAM, Mass., April 26 /PRNewswire-FirstCall/ -- Thermo Fisher
Scientific Inc. (NYSE: TMO), the world leader in serving science, reported
that revenues increased to $2.34 billion in the first quarter of 2007
(largely as a result of the November 2006 merger with Fisher Scientific),
compared with $684 million in the 2006 quarter. GAAP diluted earnings per
share (EPS) were $.31 in 2007, versus $.28 in the year-ago period. GAAP
operating income for the 2007 quarter was $192 million, compared with $68
million in 2006, and GAAP operating margin was 8.2%, compared with 9.9% a
year ago, primarily due to $114 million of higher intangibles amortization
related to the merger with Fisher and other acquisitions. GAAP results in
2007 also include $36 million of pre-tax charges related to the merger.
Adjusted EPS grew 51% to $.59 in the first quarter of 2007, versus $.39
in the 2006 quarter. Adjusted operating income increased nearly threefold
in the 2007 quarter, and adjusted operating margin increased 190 basis
points to 16.1%, compared with 14.2% in the 2006 period. Adjusted EPS,
adjusted operating income and adjusted operating margin are non-GAAP
measures that exclude certain items detailed later in this press release
under the heading "Use of Non-GAAP Financial Measures."
For a better year-to-year comparison of the company's quarterly
performance, we are also presenting our adjusted operating results on a pro
forma basis, as if Thermo and Fisher had been combined for all of 2006.
Revenues grew 11.5% over pro forma 2006 revenues of $2.10 billion.
Acquisitions (including those by Fisher prior to the merger) contributed 3%
of the growth, and currency translation increased revenues by 2%. Adjusted
operating income for the quarter increased 34% over pro forma 2006 results,
and adjusted operating margin expanded 270 basis points to 16.1%, compared
with pro forma adjusted operating margin of 13.4% in the 2006 period.
First Quarter Highlights
-- Revenues grew 11.5% over pro forma 2006
-- Adjusted EPS rose 51%
-- Adjusted operating income increased 34% over pro forma 2006
-- Adjusted operating margin expanded 270 basis points over pro forma 2006
-- Key new product introductions continue to expand portfolio
-- Merger integration progressing very well
"We're off to a great start in 2007, with excellent performance across
the board in our first full quarter as Thermo Fisher Scientific," said
Marijn E. Dekkers, president and chief executive officer. "These results
extend our track record of solid growth in revenues, adjusted EPS and
adjusted operating income, as well as significant expansion of our
operating margins. Much of this growth came from new products introduced
within the last two years, and now marketed under our Thermo Scientific
brand. Demand remained strong for our LTQ Orbitrap(TM) mass spectrometers,
iCAP(TM) elemental analysis systems and Niton(R) portable XRF analyzers. In
addition, sales of our Mercury Freedom(TM) air-quality monitors ramped up
considerably as U.S. utilities prepare to comply with new EPA regulations.
"I'm also pleased to report that we are right on track with the merger
integration. We are a stronger company today, with a unique combination of
portfolio breadth, customer reach and operating efficiency that sets us
apart in the marketplace. That said, we are also building upon our position
as the technology leader, which continues to be a key contributor to our
growth. We launched a number of new products during the quarter, including
a new line of Thermo Scientific SuperSignal(R) siRNA Western Blotting Kits
for validated detection of protein expression, and a new therapeutic
drug-monitoring assay for second-generation anti-epileptic treatments. At
PITTCON, we showcased new integrated workflows for a range of applications.
Highlights included our Thermo Scientific LTQ XL(TM) mass spectrometer with
Electron Transfer Dissociation (ETD) for faster, more accurate protein
identification during biomarker research, and our Thermo Scientific
EQuan(TM) system for better reliability in the analysis of environmental
and drinking water samples."
Mr. Dekkers added, "We remain confident in our performance outlook for
the year, and are raising our adjusted EPS guidance based on a more
favorable tax rate. We now expect to report adjusted EPS of $2.43 to $2.53
for full-year 2007, over the $2.35 to $2.45 that we announced in December
2006. This would lead to adjusted EPS growth of 27 to 32% over 2006. We are
maintaining our revenue guidance of $9.4 to $9.5 billion for 2007, which
represents an increase of approximately 6 to 8% over our pro forma 2006
results." (This guidance includes the favorable impact of a full year of
results from 2006 acquisitions and also takes into account the unfavorable
effects of 2006 divestitures. The 2007 guidance does not factor in any
future acquisitions or divestitures, and is based on present currency
exchange rates. In addition, the adjusted EPS estimate excludes
amortization expense for acquisition- related intangible assets and certain
other items detailed later in this press release under the heading "Use of
Non-GAAP Financial Measures.")
Management uses adjusted operating results to monitor and evaluate
performance of the company's business segments. Results in the following
segment information are reported on a pro forma adjusted basis for 2006, as
if Thermo and Fisher had been combined for the entire year.
Analytical Technologies Segment
Revenues in the Analytical Technologies Segment grew 15% in the first
quarter of 2007 to $1.01 billion, compared with pro forma 2006 revenues of
$872 million. Operating income increased 31% in the first quarter of 2007,
and operating margin rose to 18.9%, versus pro forma 2006 results of 16.6%.
Laboratory Products and Services Segment
In the Laboratory Products and Services Segment, revenues grew 9% in
the first quarter of 2007 to $1.42 billion, compared with pro forma 2006
revenues of $1.30 billion. Operating income increased 37% in the first
quarter of 2007, and operating margin rose to 13.1%, versus pro forma 2006
results of 10.5%.
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with
generally accepted accounting principles (GAAP), we use certain non-GAAP
financial measures, including adjusted EPS, adjusted operating income and
adjusted operating margin, which exclude restructuring and other
costs/income and amortization of acquisition-related intangible assets.
Adjusted EPS also excludes certain other gains and losses, tax
provisions/benefits related to the previous items, benefits from tax credit
carryforwards, the impact of significant tax audits or events and
discontinued operations. We exclude the above items because they are
outside of our normal operations and/or, in certain cases, are difficult to
forecast accurately for future periods. We believe that the use of non-GAAP
measures helps investors to gain a better understanding of our core
operating results and future prospects, consistent with how management
measures and forecasts the company's performance, especially when comparing
such results to previous periods or forecasts.
For example:
We exclude costs and tax effects associated with restructuring
activities, such as reducing overhead and consolidating facilities in
connection with the Fisher merger and our Kendro acquisition. We believe
that the costs related to these restructuring activities are not indicative
of our normal operating costs.
We exclude certain acquisition-related costs, including charges for the
sale of inventories revalued at the date of acquisition and professional
fees related to the merger with Fisher. We exclude these costs because we
do not believe they are indicative of our normal operating costs.
We exclude the expense and tax effects associated with the amortization
of acquisition-related intangible assets because a significant portion of
the purchase price for acquisitions may be allocated to intangible assets
that have lives of 5 to 20 years. Our adjusted EPS estimate for 2007
excludes approximately $.86 of expense for the amortization of
acquisition-related intangible assets for acquisitions completed through
the first quarter of 2007. Exclusion of the amortization expense allows
comparisons of operating results that are consistent over time for both our
newly acquired and long- held businesses and with both acquisitive and
non-acquisitive peer companies.
We also exclude certain gains/losses and related tax effects, benefits
from tax credit carryforwards and the impact of significant tax audits or
events, which are either isolated or cannot be expected to occur again with
any regularity or predictability and that we believe are not indicative of
our normal operating gains and losses. We exclude gains/losses from items
such as the sale of a business or real estate, the early retirement of debt
and debt facilities and discontinued operations.
Thermo Fisher's management uses these non-GAAP measures, in addition to
GAAP financial measures, as the basis for measuring the company's core
operating performance and comparing such performance to that of prior
periods and to the performance of our competitors. Such measures are also
used by management in their financial and operating decision-making and for
compensation purposes.
The non-GAAP financial measures of Thermo Fisher's results of
operations included in this press release are not meant to be considered
superior to or a substitute for Thermo Fisher's results of operations
prepared in accordance with GAAP. Reconciliations of such non-GAAP
financial measures to the most directly comparable GAAP financial measures
are set forth in the accompanying tables. Thermo Fisher's earnings
guidance, however, is only provided on an adjusted basis. It is not
feasible to provide GAAP EPS guidance because the items excluded, other
than the amortization expense, are difficult to predict and estimate and
are primarily dependent on future events, such as acquisitions and
decisions concerning the location and timing of facility consolidations.
Conference Call
Thermo Fisher Scientific will hold its earnings conference call today,
April 26, at 9:00 a.m. Eastern time. To listen, dial 866-802-4321 within
the U.S. or 703-639-1318 outside the U.S., and use conference ID 1026515.
You may also listen to the call live on our Website, http://www.thermofisher.com,
by clicking on "Investors." You will find this press release, including the
accompanying reconciliation of non-GAAP financial measures and related
information, in that section of our Website under "Quarterly Results." An
audio archive of the call will be available under "Webcasts and
Presentations" through Monday, May 14, 2007.
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in
serving science, enabling our customers to make the world healthier,
cleaner and safer. With an annual revenue rate of more than $9 billion, we
employ 30,000 people and serve over 350,000 customers within pharmaceutical
and biotech companies, hospitals and clinical diagnostic labs,
universities, research institutions and government agencies, as well as
environmental and industrial process control settings. Serving customers
through two premier brands, Thermo Scientific and Fisher Scientific, we
help solve analytical challenges from routine testing to complex research
and discovery. Thermo Scientific offers customers a complete range of
high-end analytical instruments as well as laboratory equipment, software,
services, consumables and reagents to enable integrated laboratory workflow
solutions. Fisher Scientific provides a complete portfolio of laboratory
equipment, chemicals, supplies and services used in healthcare, scientific
research, safety and education. Together, we offer the most convenient
purchasing options to customers and continuously advance our technologies
to accelerate the pace of scientific discovery, enhance value for customers
and fuel growth for shareholders and employees alike. Visit
http://www.thermofisher.com.
The following constitutes a "Safe Harbor" statement under the Private
Securities Litigation Reform Act of 1995: This press release contains
forward- looking statements that involve a number of risks and
uncertainties. Important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements are set
forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 2006, under the caption "Risk Factors," which is on file with
the Securities and Exchange Commission and available in the "Investors"
section of our Website under the heading "SEC Filings." We also may make
forward-looking statements about the benefits of the merger of Thermo
Electron and Fisher Scientific, including statements about future financial
and operating results, the new company's plans, objectives, expectations
and intentions and other statements that are not historical facts.
Important factors that could cause actual results to differ materially from
those indicated by forward-looking statements include risks and
uncertainties relating to: the risk that the businesses will not be
integrated successfully; the risk that the cost savings and any other
synergies from the transaction may not be fully realized or may take longer
to realize than expected; disruption from the transaction making it more
difficult to maintain relationships with customers, employees or suppliers;
competition and its effect on pricing, spending, third-party relationships
and revenues; the need to develop new products and adapt to significant
technological change; implementation of strategies for improving internal
growth; use and protection of intellectual property; dependence on
customers' capital spending policies and government funding policies;
realization of potential future savings from new productivity initiatives;
general worldwide economic conditions and related uncertainties; the effect
of changes in governmental regulations; the effect of exchange rate
fluctuations on international operations; the effect of laws and
regulations governing government contracts; the effect of competing with
certain of our customers and suppliers; and the effect of rapid changes in
the healthcare industry. While we may elect to update forward-looking
statements at some point in the future, we specifically disclaim any
obligation to do so, even if our estimates change and, therefore, you
should not rely on these forward-looking statements as representing our
views as of any date subsequent to today.
Media Contact Information:
Lori Gorski
Phone: 781-622-1242
E-mail: lori.gorski@thermofisher.com
Website: http://www.thermofisher.com
Investor Contact Information:
Ken Apicerno
Phone: 781-622-1111
E-mail: ken.apicerno@thermofisher.com
Consolidated Statement of Income
(unaudited) (a)(f)(g)
Three Months Ended
March 31, % of April 1, % of
(In millions except per share 2007 Revenues 2006 Revenues
amounts)
Revenues $2,338.2 $684.3
Costs and Operating Expenses:
Cost of revenues 1,428.1 61.1% 371.7 54.3%
Selling, general and
administrative expenses 511.2 21.9% 176.9 25.9%
Amortization of acquisition-
related intangible assets 139.3 6.0% 25.6 3.8%
Research and development
expenses 59.8 2.6% 38.7 5.7%
Restructuring and other
costs, net (d) 7.4 0.3% 3.6 0.5%
2,145.8 91.8% 616.5 90.1%
Operating Income 192.4 8.2% 67.8 9.9%
Interest Income 8.9 3.5
Interest Expense (37.2) (7.7)
Other Income, Net 1.6 0.5
Income from Continuing
Operations Before Income Taxes 165.7 64.1
Provision for Income Taxes (26.9) (20.5)
Income from Continuing Operations 138.8 43.6
Income from Discontinued
Operations (net of income tax
provision of $0.1) 0.1 --
Gain on Disposal of Discontinued
Operations (net of income tax
provision of $1.9 in 2006) -- 3.3
Net Income $138.9 5.9% $46.9 6.9%
Earnings per Share from Continuing
Operations:
Basic $.33 $.27
Diluted $.31 $.26
Earnings per Share:
Basic $.33 $.29
Diluted $.31 $.28
Weighted Average Shares:
Basic 420.1 163.0
Diluted 441.1 167.0
Reconciliation of Adjusted
Operating Income and Adjusted
Operating Margin
GAAP Operating Income (a) $192.4 8.2% $67.8 9.9%
Cost of Revenues Charges (c) 36.4 1.6% -- 0.0%
Restructuring and Other Costs,
Net (d) 7.4 0.3% 3.6 0.5%
Amortization of Acquisition-
related Intangible Assets 139.3 6.0% 25.6 3.8%
Adjusted Operating Income (b) $375.5 16.1% $97.0 14.2%
Reconciliation of Adjusted Net
Income
GAAP Net Income (a) $138.9 5.9% $46.9 6.9%
Cost of Revenues Charges (c) 36.4 1.6% -- 0.0%
Restructuring and Other Costs,
Net (d) 7.4 0.3% 3.6 0.5%
Amortization of Acquisition-
related Intangible Assets 139.3 6.0% 25.6 3.8%
Provision for Income Taxes (e) (60.4) -2.6% (8.0) -1.2%
Discontinued Operations,
Net of Tax (0.1) 0.0% (3.3) -0.5%
Adjusted Net Income (b) $261.5 11.2% $64.8 9.5%
Reconciliation of Adjusted
Earnings per Share
GAAP EPS (a) $0.31 $0.28
Cost of Revenues Charges,
Net of Tax (c) 0.06 --
Restructuring and Other Costs,
Net of Tax (d) 0.01 0.03
Amortization of Acquisition-
related Intangible Assets,
Net of Tax 0.21 0.10
Discontinued Operations,
Net of Tax -- (0.02)
Adjusted EPS (b) $0.59 $0.39
Segment Data Three Months Ended
(In millions except percentage March 31, % of April 1, % of
amounts) 2007 Revenues 2006 Revenues
Revenues
Analytical Technologies $1,006.2 43.0% $504.6 73.7%
Laboratory Products and Services 1,416.5 60.6% 179.7 26.3%
Eliminations (84.5) -3.6% -- 0.0%
Consolidated Revenues $2,338.2 100.0% $684.3 100.0%
Operating Income and Operating
Margin
Analytical Technologies $189.8 18.9% $71.5 14.2%
Laboratory Products and Services 185.7 13.1% 25.5 14.2%
Subtotal Reportable Segments 375.5 16.1% 97.0 14.2%
Cost of Revenues Charges (c) (36.4) -1.6% -- 0.0%
Restructuring and Other Costs,
Net (d) (7.4) -0.3% (3.6) -0.5%
Amortization of Acquisition-
related Intangible Assets (139.3) -6.0% (25.6) -3.8%
GAAP Operating Income (a) $192.4 8.2% $67.8 9.9%
Pro Forma Data (Unaudited) (g)(h) Three Months Ended
April 1, % of
(In millions except percentage 2006 Revenues
amounts)
Pro Forma Revenues (h)
Analytical Technologies $872.2 41.6%
Laboratory Products and Services 1,299.9 62.0%
Eliminations (75.7) -3.6%
Pro Forma Combined Revenues 2,096.4 100.0%
Pre-merger Fisher Scientific Results,
Net of Eliminations (1,412.1)
GAAP Consolidated Revenues (a) $684.3
Pro Forma Operating Income and Operating
Margin (h)
Analytical Technologies $145.0 16.6%
Laboratory Products and Services 135.9 10.5%
Other/Eliminations (0.5)
Pro Forma Adjusted Combined Operating
Income (b) 280.4 13.4%
Pre-merger Fisher Scientific Results
Included Above (183.4)
Adjusted Operating Income (b) 97.0 14.2%
Cost of Revenues Charges (c) -- 0.0%
Restructuring and Other Costs, Net (d) (3.6) -0.5%
Amortization of Acquisition-related
Intangible Assets (25.6) -3.8%
GAAP Operating Income (a) $67.8 9.9%
(a) "GAAP" (reported) results were determined in accordance with U.S.
generally accepted accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and exclude certain charges to
cost of revenues (see note (c) for details); amortization of
acquisition-related intangible assets; restructuring and other costs,
net (see note (d) for details); the tax consequences of the preceding
items (see note (e) for details); and results of discontinued
operations.
(c) Reported results in 2007 include $36.4 primarily for charges for the
sale of inventories revalued at the date of acquisition.
(d) Reported results in 2007 and 2006 include restructuring and other
costs, net, consisting principally of severance, abandoned facility
and other expenses of real estate consolidation, net of net gains in
2006 on the sale of product lines and abandoned facilities.
(e) Reported provision for income taxes includes $60.4 and $8.0 of
incremental tax benefit in 2007 and 2006, respectively, for the items
in (b) through (d).
(f) Consolidated depreciation expense in 2007 and 2006 is $46.0 and $11.8,
respectively.
(g) Consolidated equity compensation expense included in both reported and
adjusted results is $13.8 and $6.1 in 2007 and 2006, respectively. The
expense was included as follows: in 2007, cost of revenues $1.3,
selling, general and administrative expenses $12.0, and research and
development expenses $0.5; and in 2006, cost of revenues $0.6,
selling, general and administrative expenses $5.2, and research and
development expenses $0.3. Equity compensation expense included in the
pro forma 2006 results is $19.5.
(h) Pro forma results combine the results of the company with the pre-
merger results of Fisher Scientific International Inc.
Condensed Consolidated Balance Sheet (unaudited)
(In millions) Mar. 31, 2007 Dec. 31, 2006
Assets
Current Assets:
Cash and cash equivalents $670.9 $667.4
Short-term investments 20.5 23.8
Accounts receivable, net 1,419.0 1,392.7
Inventories 1,180.5 1,164.5
Other current assets 455.3 411.1
Total current assets 3,746.2 3,659.5
Property, Plant and Equipment, Net 1,256.2 1,256.7
Acquisition-related Intangible Assets 7,333.2 7,511.6
Other Assets 258.3 309.4
Goodwill 8,578.0 8,525.0
Total Assets $21,171.9 $21,262.2
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current
maturities of long-term obligations $167.4 $483.3
Other current liabilities 1,629.1 1,669.0
Total current liabilities 1,796.5 2,152.3
Other Long-term Liabilities 2,960.3 3,017.4
Long-term Obligations 2,182.4 2,180.7
Total Shareholders' Equity 14,232.7 13,911.8
Total Liabilities and Shareholders' Equity $21,171.9 $21,262.2
SOURCE Thermo Fisher Scientific Inc.
 back to top
Related links:
http://www.thermofisher.com
http://www.prnewswire.com/comp/877850.html /
CONTACT:
media, Lori Gorski, +1-781-622-1242,
lori.gorski@thermofisher.com, or investors, Ken Apicerno,
+1-781-622-1111, ken.apicerno@thermofisher.com, both of Thermo
Fisher Scientific Inc.
|
